For personal use only
WESTPAC
CAPITAL NOTES
PROSPECTUS
issuer
Westpac Banking Corporation
abn 33 007 457 141
Date of this PROSPECTUS
7 February 2013
STRUCTURING ADVISER
Deutsche Bank
JOINT LEAD MANAGERS
AND JOINT BOOKRUNNERS
Westpac Institutional Bank
ANZ Securities
Commonwealth Bank of Australia
Deutsche Bank
Macquarie Capital (Australia) Limited
Morgan Stanley Australia Securities Limited
UBS
Online manager
Westpac Online Investing
IMPORTANT NOTICES
About this Prospectus
This Prospectus relates to the offer of Westpac Capital
Notes (“Notes”) at a Face Value of $100 each to raise
approximately $1.25 billion with the ability to raise more
or less.
Except for any liability which cannot be excluded by law,
each Joint Lead Manager and its respective directors
officers, employees and advisers expressly disclaims
and does not accept any liability for the contents of the
Prospectus, the Notes or the Offer.
The Westpac Capital Notes offered under this Prospectus
are designated as Series 2013-1.
Restrictions in foreign jurisdictions
This Offer is being made in Australia only. The
distribution of this Prospectus (including an electronic
copy) in jurisdictions outside Australia may be restricted
by law. If you come into possession of this Prospectus
in jurisdictions outside Australia, you should seek advice
on, and observe, any such restrictions. If you fail to
comply with such restrictions that failure may constitute
a violation of applicable securities laws.
For personal use only
Westpac Capital Notes are fully paid, non-cumulative,
convertible, transferable, redeemable, subordinated,
perpetual, unsecured notes issued by Westpac.
This Prospectus is dated 7 February 2013 and was
lodged with the Australian Securities and Investments
Commission (“ASIC”) on that date. This is a
replacement prospectus which replaces the prospectus
dated 30 January 2013 and lodged with ASIC on that
date (“Original Prospectus”). ASIC and ASX Limited
(“ASX”) take no responsibility for the content of this
Prospectus nor for the merits of the investment to which
this Prospectus relates. This Prospectus expires on the
date which is 13 months after the date of the Original
Prospectus (“Expiry Date”) and no Notes will be issued
or transferred on the basis of this Prospectus after the
Expiry Date.
The Notes are not deposit liabilities or protected
accounts of Westpac for the purposes of the
Banking Act or Financial Claims Scheme and are
not subject to the depositor protection provisions
of Australian banking legislation (including the
Australian Government guarantee of certain bank
deposits).
The Notes are not secured. Investment-type products
are subject to investment risk, including possible delays
in payment and loss of income and principal invested.
Neither Westpac nor any member of the Westpac
Group in any way guarantees the capital value and/or
performance of the Notes or any particular rate of return.
Defined words and expressions
Some words and expressions used in this Prospectus
are capitalised as they have defined meanings. The
Glossary in Appendix A and clause 15.2 of the Westpac
Capital Notes Terms in Appendix B define these words
and expressions.
A reference to time in this Prospectus is to Sydney
time, unless otherwise stated. A reference to $, A$,
dollars and cents is to Australian currency, unless
otherwise stated.
No representations other than in this
Prospectus
You should rely only on information in this Prospectus.
No person is authorised to provide any information
or to make any representations in connection with the
Offer which is not contained in this Prospectus. Any
information or representations not contained in this
Prospectus may not be relied upon as having been
authorised by Westpac in connection with the Offer.
Except as required by law, and only to the extent so
required, neither Westpac nor any other person warrants
the future performance of the Notes, Westpac or any
return on any investment made under this Prospectus.
The financial information provided in this Prospectus
is for information purposes only and is not a forecast
of operating results to be expected in future periods.
This Prospectus does not provide
investment advice – you should seek
your own professional investment advice
The information in this Prospectus is not investment
advice and has been prepared without taking into
account your investment objectives, financial situation
and particular needs (including financial and taxation
issues) as an investor. It is important that you read the
entire Prospectus before deciding whether to invest
in the Notes. In particular, it is important that you
consider the risk factors that could affect the financial
performance and position of the Notes and Westpac.
You should carefully consider these factors and other
information in the Prospectus in light of your particular
investment objectives, financial situation and particular
needs (including financial and taxation issues) and
seek professional investment advice from your financial
adviser or other professional adviser before deciding
whether to apply for Notes. For investment risks that you
should consider, see Section 1.3 and Section 5.
This Prospectus does not constitute an offer in any
jurisdiction in which, or to any person to whom, it would
not be lawful to make such an offer. No action has been
taken to register or qualify the Notes or the Offer or to
otherwise permit a public offering of the Notes in any
jurisdiction outside Australia. In particular, the Notes
have not been, and will not be, registered under the US
Securities Act or the securities law of any state of the
United States. Therefore, the Notes may not be offered,
sold, delivered or transferred, directly or indirectly, in the
United States or to, or for the account or benefit of, any
US Person.
If you access an electronic copy of this Prospectus,
you should ensure that you download and read the
entire Prospectus.
Application Forms will only be available during the
Offer Period together with printed or electronic copies
of the Prospectus.
Applications for Westpac Capital Notes
Applications for Notes under this Prospectus may only
be made during the Offer Period on an Application Form
attached to or accompanying this Prospectus including,
in the case of Eligible Securityholders, an online
Application. The Corporations Act prohibits any person
from passing the Application Form on to another person
unless it is attached to a printed copy of this Prospectus
or the complete and unaltered electronic version of
this Prospectus.
You should read this Prospectus in its entirety before
deciding to apply for Notes. If, after reading this
Prospectus, you are unclear or have any questions
about the Offer, then you should consult your financial
adviser or other professional adviser.
For information on who is eligible to apply for Notes
under the Offer and how to make an Application – see
pages 17 and 18 for a summary, and Section 3 and the
Application Forms for full details.
Each of the Joint Lead Managers has agreed that it will
not offer, sell, deliver or transfer the Notes (i) as part of
their distribution at anytime or (ii) otherwise until 40 days
after the later of the commencement of the Offer and
Issue Date (the “Distribution Compliance Period”),
within the United States or to, or for the account or
benefit of, US Persons, and it will have sent to each
dealer, distributor or other relevant parties to which
Notes are allocated during the Distribution Compliance
Period a confirmation or other notice setting forth the
restrictions on offers, sales, deliveries and transfers
of the Notes within the United States or to, or for the
account or benefit of, US Persons.
Electronic access to Prospectus
The following conditions apply if this Prospectus
is accessed electronically:
• you must download the Prospectus in its entirety
from www.westpac.com.au/investorcentre; and
• the Prospectus is only available electronically to
persons accessing and downloading or printing the
electronic version of the Prospectus in Australia.
In addition, until 40 days after the commencement of
the Offer, an offer or sale of the Notes within the United
States by any dealer that is not participating in the Offer
may violate the registration requirements of the US
Securities Act.
Refunds
If you are Allocated less than the number of Notes that
you applied for, you will receive a refund cheque as
soon as possible after the Issue Date. If the Offer does
not proceed, any Application Payment you have made
will be refunded to you. No interest will be payable on
Application Payments.
Each of the Joint Lead Managers has agreed that
(i) neither it, its affiliates nor any persons acting on its or
their behalf have engaged or will engage in any directed
selling efforts within the meaning of Rule 902 under
the US Securities Act with respect to the Notes, and it
and they have complied with and will comply with the
offering restrictions requirement of Regulation S under
the US Securities Act and (ii) it has not entered into and,
without Westpac’s prior consent, will not enter into, any
contractual arrangement with respect to the distribution
or delivery of the Notes, except with its affiliates.
Exposure Period
The Corporations Act prohibits the acceptance of
Applications during the seven day period after the
date the Original Prospectus was lodged with ASIC.
This period is referred to as the Exposure Period and
ASIC may extend this period by up to a further seven
days (that is up to 14 days in total). The purpose of the
Exposure Period was to enable the Original Prospectus
to be examined by market participants before the
Opening Date.
How to obtain a Prospectus and an
Application Form
During the Offer Period, Eligible Securityholders may
obtain a copy of this Prospectus with an Application
Form accompanying it free of charge by:
• calling the Westpac Capital Notes Information Line
(Monday to Friday, 8.30am to 5.30pm, Sydney
time) on 1300 133 814; or
• registering online to receive a Prospectus
at www.westpac.com.au/investorcentre.
During the Offer Period, Broker Firm Applicants can
obtain a copy of this Prospectus, including an Application
Form, by downloading a copy from the Westpac website
at www.westpac.com.au/investorcentre or from their
Syndicate Broker.
An electronic copy of the Prospectus can be downloaded
from the Westpac website at www.westpac.com.au/
investorcentre.
No withdrawal of Application
You cannot withdraw your Application once it has been
lodged, except as permitted under the Corporations Act.
Trading in Westpac Capital Notes
It is your responsibility to determine your Allocation
before trading in Notes to avoid the risk of selling Notes
you do not own. To assist you in determining your
Allocation before the receipt of your Holding Statement,
you may call the Westpac Capital Notes Information
Line (Monday to Friday 8.30am to 5.30pm,
Sydney time) on 1300 133 814 if you are an Eligible
Securityholder or contact your Syndicate Broker if you
are a Broker Firm Applicant. If you sell Notes before
you receive confirmation of your Allocation, you do so
at your own risk.
Providing personal information
You will be asked to provide personal information
to Westpac (directly or via the Registry) if you apply
for Notes. See Section 8.10 for information on how
Westpac (and the Registry on its behalf) collects, holds
and uses this personal information. You can also obtain
a copy of that policy at www.westpac.com.au.
Code of Banking Practice
Westpac voluntarily subscribes to the Code of Banking
Practice (“Code”) which provides for certain standards
of dealing with respect to persons to whom it supplies
a financial product who are retail clients (as defined
in Chapter 7 of the Corporations Act). A copy of
the Code is available on Westpac’s website at
www.westpac.com.au and information regarding
Westpac’s confidentiality obligations with respect
to your personal information, complaint handling
procedures or other matters the subject of the Code
which are relevant to the Notes is available on request.
Enquiries
If you have any questions in relation to the Offer,
please call the Westpac Capital Notes Information
Line (Monday to Friday 8.30am to 5.30pm, Sydney
time) on 1300 133 814 (local call cost within Australia)
or contact your financial adviser or other professional
adviser.
For personal use only
TABLE OF
CONTENTS
Important notices
Inside front cover
ASIC guidance for retail investors
2
Key dates for the Offer and Westpac Capital Notes
3
Section 1
Investment overview
4
Section 2
Information about Westpac Capital Notes
19
Section 3
Application information
48
Section 4
About Westpac
55
Section 5
Investment risks
63
Section 6
Taxation Letter
79
Section 7
Summary of important documents
87
Section 8
Additional information
92
Appendix A
Glossary
98
Appendix B
Westpac Capital Notes Terms
Broker Firm Application Form
110
137
Corporate Directory
Inside back cover
TABLE OF CONTENTS
1
For personal use only
ASIC Guidance FOR
Retail Investors
2
ASIC has published guidance which may be relevant to your
consideration of the Westpac Capital Notes – namely, information
for retail investors who are considering investing in hybrid securities
called “Hybrid securities and notes” (under the heading “Complex
investments” at www.moneysmart.gov.au/investing). Free copies
of the ASIC guidance can be obtained from ASIC’s website
at www.moneysmart.gov.au/investing or by calling ASIC on
1300 300 630 (from Australia) or +61 3 5177 3988 (from outside
Australia). Free copies of the ASIC guidance can also be obtained
from www.westpac.com.au/investorcentre.
Where can I obtain further information about Westpac
and Westpac Capital Notes?
Westpac is a disclosing entity for the purposes of the Corporations Act and, as a result, is subject to regular
reporting and disclosure obligations under the Corporations Act and the ASX Listing Rules. In addition,
Westpac must notify ASX immediately (subject to certain exceptions) if it becomes aware of information
about Westpac that a reasonable person would expect to have a material effect on the price or value of its
securities including Westpac Capital Notes.
Copies of documents lodged with ASIC and ASX can be obtained from, or inspected at, an ASIC office and
can also be obtained from www.asx.com.au.
Further information about Westpac, including Westpac’s half-yearly and annual financial reports,
presentations and other investor information, can be obtained from www.westpac.com.au/investorcentre.
Investments in the Westpac Capital Notes are an investment in Westpac and may be affected
by the ongoing performance, financial position and solvency of Westpac. They are not deposit
liabilities or protected accounts of Westpac for the purposes of the Banking Act or Financial Claims
Scheme and are not subject to the depositor protection provisions of Australian banking legislation
(including the Australian Government guarantee of certain bank deposits).
PROSPECTUS
For personal use only
KEY DATES FOR THE OFFER
AND WESTPAC CAPITAL NOTES
KEY DATES FOR THE OFFER
Record date for determining Eligible Securityholders (7.00pm Sydney time)
21 January 2013
Announcement of Offer
30 January 2013
Bookbuild
6 February 2013
Announcement of Margin
6 February 2013
Lodgement of Prospectus with ASIC
7 February 2013
Opening Date for the Offer
7 February 2013
Closing Date for the Securityholder Offer (5.00pm Sydney time)
1 March 2013
Closing Date for the Broker Firm Offer (10.00am Sydney time)
7 March 2013
Issue Date
8 March 2013
Commencement of deferred settlement trading
12 March 2013
Holding Statements dispatched by
15 March 2013
Commencement of normal settlement trading
18 March 2013
KEY DATES FOR THE WESTPAC CAPITAL NOTES
Record Date for first Distribution
31 May 2013
First Distribution Payment Date
8 June 20132
1
Optional Redemption/Transfer Date3
8 March 2019
Scheduled Conversion Date4
8 March 2021
Dates May Change
These dates are indicative only and may change. Westpac and the Joint Lead Managers may, in their
absolute discretion, close the Offer early or extend the Offer Period without notice. Westpac may also
withdraw the Offer at any time before Notes are issued. Accordingly, if you wish to apply for Notes, you
are encouraged to do so as soon as possible after the Opening Date. The period between the Opening
Date and the Closing Dates is known as the Offer Period.
If any of these dates are not Business Days and an event under the Westpac Capital Notes Terms is
stipulated to occur on that day, then the event will occur on the next Business Day.
Quotation of the Westpac Capital Notes on ASX
Westpac has applied to ASX for the Notes to be quoted on ASX. Quotation of the Notes is not
guaranteed. If ASX does not grant permission for the Notes to be quoted, then the Notes will not be
issued and all Application Payments will be refunded (without interest) to Applicants as soon as possible.
Making an Application
For information on who is eligible to apply for the Notes under the Offer and how to make an Application
– see pages 17 and 18 for a summary and Section 3 and the Application Forms for full details.
Note:
1. Distributions are payable quarterly, subject to the satisfaction of the Distribution Payment Conditions – see Section 2.2.11.
2. The first Distribution Payment Date is not a Business Day, accordingly the expected first Distribution will be made on the next Business Day.
3. There can be no certainty that APRA will provide its prior written approval for any such Redemption.
4. Conversion of the Notes to Ordinary Shares on this date is subject to satisfaction of the Scheduled Conversion Conditions – see Section 2.4.4.
Key dates for the Offer and Westpac Capital Notes
3
For personal use only
1
Investment
overview
This Section provides an overview of an investment
in the Westpac Capital Notes.
The following is an overview of the key terms of the
Notes, the key benefits and risks of investing in the
Notes, the key differences between the Notes and other
Westpac investments or products and the key features
of the Offer. Detailed information about these matters
is provided in the following Sections of this Prospectus
and it is important that you read this Prospectus and
the Westpac Capital Notes Terms in full before deciding
to invest in the Notes. If you have any questions, you
should seek advice from your financial adviser or other
professional adviser before deciding to invest.
The full Westpac Capital Notes Terms are contained in
Appendix B. Rights and liabilities attaching to the Notes
may also arise under the Corporations Act, ASX Listing
Rules and other applicable laws.
For personal use only
This Section sets out:
1.1 Key features of the Westpac Capital Notes
1.2 Key benefits of the Westpac Capital Notes
1.3 Key risks associated with an investment in the Westpac Capital Notes and Westpac
1.4 Key differences between Westpac Capital Notes and other Westpac investments or products
1.5 Key features of the Offer and how to apply
1.1 Key features of the Westpac Capital Notes
Topic
Summary
Further information
1.1.1 What is
the Offer?
• The Offer is for the issue of Westpac Capital
Notes to raise approximately $1.25 billion, with
the ability to raise more or less.
Section 3.1
1.1.2 Who is
the issuer?
• Westpac Banking Corporation
ABN 33 007 457 141.
Section 4
1.1.3 What are
the Westpac
Capital Notes?
Westpac Capital Notes are:
Section 2
Westpac Capital
Notes Terms
• fully paid – the Issue Price ($100 per Note) must
be paid to Westpac before the Notes are issued;
Pages
49
55-62
19-47,
110-135
• non-cumulative – they offer non-cumulative
Distributions;
• convertible – in certain circumstances Westpac
will be required to Convert the Notes into Ordinary
Shares;
• redeemable and transferable – in certain
circumstances Westpac may be permitted to
repay the Face Value of the Notes or transfer the
Notes to a third party (but there are significant
restrictions on repayment of the Notes);
• perpetual – they do not have any fixed maturity
date and could exist indefinitely (in which case you
would not receive your capital back or be issued
Ordinary Shares);
• unsecured – they are not guaranteed nor are
they deposit liabilities or protected accounts of
Westpac under the Banking Act or Financial
Claims Scheme and they are not subject to the
depositor protection provisions of Australian
banking legislation; and
• subordinated – although they have priority over
Ordinary Shares and rank equally with certain
other Capital Securities issued by Westpac, they
are subordinated to claims of Senior Creditors in
a Winding Up.
SECTION 1 Investment Overview
5
For personal use only
Investment
Overview
Topic
Summary
Further information
Pages
1.1.4 Why
is Westpac
issuing the
Westpac
Capital Notes?
• Westpac is issuing the Notes to raise regulatory
capital which satisfies the regulatory capital
requirements of the Australian Prudential
Regulation Authority (“APRA”). The proceeds
received under the Offer will be used by Westpac
for general business purposes.
Sections 2.3.1 and
2.7
28, 39
39
• The Notes and Westpac’s other Capital
Securities, including Ordinary Shares, help to
protect Westpac’s depositors and other creditors
by providing a loss-absorbing capital buffer
which supports losses that may be incurred on
Westpac’s assets.
• The terms of the Notes are complex and derive
from the detailed capital requirements which
APRA applies to these instruments. Westpac’s
ability to pay Distributions or to optionally
Redeem (i.e. pay out) the Notes is dependent
on APRA either not objecting or giving prior
written approval respectively.
1.1.5 How are
the Westpac
Capital Notes
treated by
APRA for
regulatory
capital
purposes?
• The Notes qualify as Additional Tier 1 Capital to
satisfy Westpac’s regulatory capital requirements.
Sections 2.7.3 and
2.7.4
1.1.6 What
Distributions
are payable?
• The Notes offer Holders floating rate Distributions
until the Notes are Converted or Redeemed. The
Distribution Rate is determined quarterly as the
sum of the 90 day Bank Bill Rate per annum plus
the Margin per annum, together multiplied by
(1 – Tax Rate)1.
Section 2.2
Westpac Capital
Notes Terms clauses
3.1 and 3.5
• The Margin is 3.20% per annum.
• Distributions are expected to be fully franked.
• Distributions are scheduled to be paid quarterly
in arrear beginning on 8 June 20132. The dates
on which Distributions are paid are referred to
as “Distribution Payment Dates”.
Note:
1. The Tax Rate is 30% (or 0.30 expressed as a decimal) as at the date of this Prospectus.
2. The first Distribution Payment Date is not a Business Day, accordingly the expected first Distribution will be made on the next Business Day.
6
Prospectus
22-28,
111-112
For personal use only
Topic
Summary
Further information
1.1.7 Will
Distributions
always be
paid?
• Payments of Distributions are within the absolute
discretion of Westpac, which means Westpac
does not have to pay them. Distributions are
also only payable if the Distribution Payment
Conditions are satisfied. These conditions include
the requirement that paying a Distribution would
not result in a breach of APRA’s regulatory capital
requirements.
Sections 2.2.11,
2.2.12 and 2.2.13
Pages
27-28,
112-113
Westpac Capital
Notes Terms clauses
3.3, 3.4, 3.7 and 3.8
• If any Distributions on the Notes are not paid,
Westpac is prevented from determining or paying
any Dividends or undertaking any discretionary
Buy Back or Capital Reduction unless the
amount of the unpaid Distribution is paid in
full within 20 Business Days or all Notes have
been Converted or Redeemed, a Distribution for
a subsequent Distribution Period has been paid
in full, or Holders pass a Special Resolution, and
APRA does not otherwise object.
• Distributions are non-cumulative, which means
that unpaid Distributions will not be made up
or accumulate. Holders will not have any rights
to compensation if Westpac does not pay
Distributions. Failure to pay any Distribution is not
an event of default (the Westpac Capital Notes
Terms do not include any events of default) and
Holders have no right to apply for a Winding Up
on the grounds of non‑payment of a Distribution.
1.1.8 What
will happen
to my Westpac
Capital Notes?
• What will happen to the Notes is uncertain
and depends on a number of factors including
whether Scheduled Conversion will occur,
whether a Capital Trigger Event, Non-Viability
Trigger Event or Acquisition Event occurs,
whether Westpac elects to Redeem or Transfer
the Notes and whether APRA’s approval is given
when required under the Westpac Capital Notes
Terms.
Sections 2.1.1, 2.4,
2.5 and 2.6
Westpac Capital
Notes Terms clauses
4, 5, 6 and 7
20-21,
29-38,
113-118
• Holders have no right to request or require
Westpac to Convert, Redeem or arrange for the
Transfer of the Notes.
• If a Capital Trigger Event or Non-Viability Trigger
Event occurs and Conversion of Notes is not
possible, all rights in relation to those Notes
will be terminated (and you will not get your
capital back).
SECTION 1 Investment Overview
7
For personal use only
Investment
Overview
Topic
Summary
Further information
1.1.9 Will the
Westpac Capital
Notes be
Redeemed?
• If Westpac Redeems your Notes you will be paid
their Face Value ($100 per Note) and the Notes
will be cancelled.
Sections 2.6.1 to
2.6.5
• Westpac can only Redeem the Notes if APRA
is satisfied with Westpac’s capital position,
which may mean that Westpac must replace
the Notes with regulatory capital of the same
or better quality. This is intended to protect
Westpac’s depositors.
• If APRA gives its prior written approval,
Westpac will have a right to Redeem some or
all of the Notes on 8 March 2019 (the “Optional
Redemption/Transfer Date”).
• If APRA gives its prior written approval, Westpac
will also have a right to Redeem in the following
circumstances:
–– where a Franking Event occurs (for example,
if Westpac determines that because of a
change in law that Westpac did not expect
at the Issue Date there is a material risk that
Distributions will not be frankable);
–– where a Tax Event occurs (for example, if
Westpac determines that there is a material
risk that the Westpac Group will incur an
increase in costs or taxes in relation to the
Notes other than a tax or cost that is minor
or that Westpac expected at the Issue Date); or
–– where a Regulatory Event occurs (for
example, if as a result of a change in law that
Westpac did not expect at the Issue Date,
additional requirements would be imposed
on the Westpac Group in relation to the Notes
or there would be a negative impact on the
Westpac Group, or if Westpac determines that
the Notes will not receive certain regulatory
capital treatment).
If Westpac chooses to Redeem in these
circumstances, it must Redeem all of the Notes.
• There are significant restrictions on Westpac’s
right to Redeem the Notes with cash.
• Most importantly, Westpac’s ability to Redeem the
Notes is subject to receiving APRA’s prior written
approval. There can be no certainty that APRA will
provide its prior written approval.
8
Prospectus
Westpac Capital
Notes Terms
clauses 6 and
15.2 (definitions of
“Franking Event”,
“Tax Event” and
“Regulatory Event”)
Pages
37-38,
117-118,
131-133
For personal use only
Topic
Summary
Further information
1.1.10 When
can the
Westpac Capital
Notes be
Transferred?
• Instead of Redeeming the Notes, Westpac may
require Holders to Transfer all or some of their
Notes to a nominated third party on 8 March 2019
(the “Optional Redemption/Transfer Date”).
Upon Transfer, Holders would receive the Face
Value ($100) per Note from the third party
transferee. If the third party transferee does not
pay the Face Value to Holders on the Optional
Redemption/Transfer Date, the Transfer will
not proceed and Holders will continue to hold
their Notes.
Section 2.6.3
1.1.11 When
will the
Westpac
Capital Notes
Convert to
Ordinary
Shares?
• Scheduled Conversion Date: The Scheduled
Conversion Date is 8 March 2021 or the first
Distribution Payment Date after 8 March 2021
on which the Scheduled Conversion Conditions
are satisfied. These conditions are intended to
ensure that upon Conversion on the Scheduled
Conversion Date, Holders will receive Ordinary
Shares worth approximately $101.01 per Note
(based on the initial Face Value of $100 and
the volume weighted average price of Ordinary
Shares during the 20 Business Days before the
Scheduled Conversion Date, with the benefit of
a 1% discount). However, if the market price of
Ordinary Shares on the Scheduled Conversion
Date is different to the price used to calculate
the number of Ordinary Shares to be issued on
Conversion, the value of Ordinary Shares resulting
from the Conversion of one Note may be worth
more or less than $101.01.
Sections 2.4 and 2.5
SECTION 1 Investment Overview
Pages
37, 118
Westpac Capital
Notes Terms clause
7
Westpac Capital
Notes Terms clauses
4 and 5
29-36,
113-116
9
For personal use only
Investment
Overview
10
Topic
Summary
Further information
Pages
1.1.11 When
will the
Westpac
Capital Notes
Convert to
Ordinary
Shares?
(continued)
• Capital Trigger Event or Non-Viability Trigger
Event: If
Sections 2.4 and 2.5
29-36,
113-116,
128-130,
132
–– Westpac’s Common Equity Tier 1 Capital Ratio
becomes equal to or less than 5.125% on a
Level 1 or Level 2 basis (a “Capital Trigger
Event”); or
–– APRA determines that Westpac is non-viable
(a “Non-Viability Trigger Event”),
Westpac will be required to Convert some or all
of the Notes to Ordinary Shares (or, where that is
not possible, all rights in relation to those Notes
will be terminated). If Conversion occurs in
these circumstances, Holders are likely to receive
Ordinary Shares that are worth significantly less
than $101.01 for each Note they hold.
Westpac Capital
Notes Terms
clauses 4, 5 and
15.2 (definitions of
“Acquisition Event”,
“Capital Trigger
Event” and “NonViability Trigger
Event”)
• Acquisition Event: Westpac will also be required
to Convert all of the Notes to Ordinary Shares if an
Acquisition Event occurs (for example, if there is a
takeover bid or scheme of arrangement in relation
to Westpac) where certain conditions are satisfied.
1.1.12 Do
the Westpac
Capital Notes
have voting
rights?
• Holders have no right to vote at any general
meeting of Westpac before Conversion.
Sections 2.9.5,
2.13.1 and 7.2
• Holders have certain voting rights which can be
exercised at a meeting of Holders, as set out in
the Notes Deed Poll.
Westpac Capital
Notes Terms
clause 13.7(a)
• Following Conversion, Holders will become
holders of Ordinary Shares, and have the voting
rights that attach to Ordinary Shares.
Prospectus
42, 47,
88-89,
127
For personal use only
Topic
Summary
Further information
Pages
1.1.13 How
would the
Westpac
Capital Notes
rank in a
Winding Up
of Westpac?
• In a Winding Up, the Notes, if they are on issue at
the time, rank ahead of Ordinary Shares and equally
with Equal Ranking Capital Securities (which
currently include TPS 2003, TPS 2004, Westpac
TPS, Westpac SPS, Westpac SPS II and Westpac
CPS), but behind claims of Senior Creditors,
including depositors of Westpac and all holders of
Westpac’s senior or less subordinated debt.
Westpac Capital Notes
Terms clause 2
111,
41, 67
• However, any return in a Winding Up may be
adversely affected if a Capital Trigger Event or
Non-Viability Trigger Event has occurred.
• Following Conversion, Holders will become
holders of Ordinary Shares, and in a Winding Up
of Westpac will rank equally with all other holders
of Ordinary Shares.
For further information
about the situation
where a Capital
Trigger Event or NonViability Trigger Event
has occurred but
Westpac is not able to
issue Ordinary Shares,
see Sections 2.8.4
and 5.1.9
• The table below illustrates how the Notes would
rank upon Winding Up of Westpac if they are on
issue at that time:
Higher ranking
Illustrative examples1
Preferred and
secured debt
Liabilities in Australia in relation to protected accounts (generally,
savings accounts and term deposits) and other liabilities preferred
by law including employee entitlements and secured creditors
Unsubordinated
unsecured debt
Trade and general creditors, bonds, notes and debentures
(including covered bonds) and other unsubordinated unsecured
debt obligations
Subordinated
unsecured debt
Westpac Subordinated Notes 2012, other subordinated bonds,
notes and debentures and other subordinated unsecured debt
obligations with a fixed maturity date
Subordinated
perpetual debt
Subordinated perpetual floating rate notes issued in 1986
Tier 1 Capital
hybrid
securities
Westpac Capital Notes, and notes or preference shares in
respect of TPS 2003, TPS 2004, Westpac TPS, Westpac SPS,
Westpac SPS II and Westpac CPS
Ordinary shares
Ordinary Shares
Lower ranking
1.1.14 ASX
quotation
• The Notes will be quoted on ASX (or, if ASX does
not grant permission for the Notes to be quoted,
the Notes will not be issued). They are expected
to trade under the code WBCPD.
Sections 3.8.1, 5.1.3
and 5.1.4
52,
64-65
• Once quoted on ASX, you will be able to buy or
sell Notes on market. However, there may or may
not be a liquid market for the Notes, which in turn
may affect the market price.
Note:
1. This diagram and the descriptions are simplified and illustrative only, and do not include every type of security or obligation that may be issued or entered into by Westpac,
or every potential claim against Westpac in a Winding Up. Westpac will from time to time issue additional securities or incur other obligations that rank ahead of, equally with,
or subordinated to Westpac Capital Notes.
SECTION 1 Investment Overview
11
For personal use only
Investment
Overview
1.2 Key benefits of the Westpac Capital Notes
Topic
Summary
Further information
1.2.1 What
are the key
benefits of
the Westpac
Capital Notes?
• Floating rate Distributions.
Section 2
Pages
19-47
• Margin is 3.20% per annum.
• Distributions paid quarterly in arrear, subject to the
satisfaction of the Distribution Payment Conditions,
including Westpac’s absolute discretion not to
make a payment.
• Distributions are expected to be fully franked.
• The Notes may be sold on ASX (subject to the
liquidity of that market).
• Provides investors with an opportunity to diversify
their investment portfolio.
1.3 Key risks associated with an investment in the Westpac
Capital Notes and Westpac
Before applying for the Notes, you should consider whether the Notes are a suitable investment for you. There
are risks involved with investing in the Notes and in Westpac. Many of these risks are outside the control of
Westpac and the Westpac Directors. These risks include those in this Section 1.3 and Section 5 and any other
matters referred to in this Prospectus.
1.3.1 Key risks associated with an investment in the Westpac Capital Notes
12
Topic
Summary
Further information
Pages
Ranking of
the Westpac
Capital Notes
• In the unlikely event of a Winding Up, if the Notes
are still on issue they will rank ahead of Ordinary
Shares, equally with all Equal Ranking Capital
Securities and behind Senior Creditors.
Sections 1.1.13, 2.9.1 11, 41,
and 5.1.2
64
• If there is a shortfall of funds on a Winding Up
to pay all amounts ranking senior to and equally
with Notes, Holders will lose all or some of their
investment.
Market price
of the Westpac
Capital Notes
may fluctuate
• It is possible that the Notes may trade at a market
price below Face Value.
• Circumstances in which the market price of the
Notes may decline include general financial
market conditions, changes in investor perception
and sentiment in relation to Westpac and the
availability of better rates of return on other
securities issued by Westpac or other issuers.
Prospectus
Section 5.1.3
64-65
For personal use only
Topic
Summary
Further information
Liquidity of
the Westpac
Capital Notes
may be low
• The market for the Notes may be less liquid than
the market for Ordinary Shares.
Section 5.1.4
Distributions
may not be
paid
• There is a risk that Distributions will not be
paid. Distributions are discretionary and are
only payable subject to the satisfaction of the
Distribution Payment Conditions.
Pages
65
• Holders who wish to sell their Notes may be
unable to do so at an acceptable price, or at all,
if insufficient liquidity exists in the market for the
Notes.
Sections 1.1.7
and 5.1.5
7, 65
Sections 1.1.6
and 5.1.6
6, 65
• Distributions are non-cumulative. If a Distribution
is not paid in full because the Distribution
Payment Conditions are not satisfied, Holders are
not entitled to receive the unpaid portion of that
Distribution.
Changes in the
Distribution
Rate
• The Distribution Rate will fluctuate (and may
increase and/or decrease) over time with
movements in the 90 day Bank Bill Rate.
• There is a risk that the rate may become less
attractive compared to returns available on
comparable securities or investments.
Conversion
or termination
of rights on
account of a
Capital Trigger
Event or a NonViability Trigger
Event
• The value of Ordinary Shares received for each
Note that is Converted upon the occurrence of
a Capital Trigger Event or Non-Viability Trigger
Event may be less than the Face Value of each
Note.
Exposure to
Westpac’s
financial
performance
and position
• Investments in the Notes may be affected by
the ongoing performance and financial position
of Westpac.
Sections 1.1.11, 5.1.7,
5.1.8 and 5.1.9
9-10,
66-67
• If for any reason Conversion of Notes is not
possible following the occurrence of a Capital
Trigger Event or Non-Viability Trigger Event (for
example, due to applicable laws, order of a court
or action of any government authority), all rights
(including to Distributions) in respect of those
Notes will be terminated. Your investment will
lose all of its value and you will not receive any
compensation.
SECTION 1 Investment Overview
Section 5.1.10
67
13
For personal use only
Investment
Overview
Topic
Summary
Further information
Pages
The price used
to calculate
the number
of Ordinary
Shares to be
issued on
Conversion
may not be the
market price
• The price used to calculate the number of
Ordinary Shares to be issued on Conversion may
be different to the market price of Ordinary Shares
at the time of Conversion.
Section 5.1.11
67
It is not certain
whether and
when the
Westpac
Capital
Notes will be
Converted,
Redeemed or
Transferred
• Conversion may not occur on 8 March 2021,
being the first possible Scheduled Conversion
Date, or at all.
Sections 5.1.13,
5.1.14 and 5.1.15
68
No fixed
maturity date
• As the Notes are perpetual instruments and have
no fixed maturity date, there is a risk you may not
be repaid your capital.
Section 5.1.16
69
Future issues
of securities by
Westpac
• Westpac may issue further securities which rank
equally with or ahead of the Notes.
Section 5.1.21
70
• Conversion, Redemption or Transfer may occur
in certain circumstances before the Scheduled
Conversion Date, which may be disadvantageous
in light of market conditions or your individual
circumstances.
1.3.2 Key risks associated with Westpac and the Westpac Group
14
Topic
Summary
Further information
Compliance
and regulatory
change
• Westpac could be adversely affected by failing
to comply with existing laws and regulations,
or by changes in laws and regulations and
regulatory policy.
Section 5.2.1
71-72
Availability and
cost of funding
• Adverse credit and capital market conditions,
or adverse changes to Westpac’s credit ratings,
may significantly affect the availability and cost
of Westpac’s funding.
Sections 5.2.2 and
5.2.3
73-74
Financial
market
volatility
• Westpac could be adversely affected by
disruptions to global financial markets or other
financial market volatility.
Sections 5.2.4 and
5.2.9
74, 76
Prospectus
Pages
For personal use only
Topic
Summary
Further information
Pages
Economic
conditions,
asset values
and credit
losses
• Economic disruptions or declines in asset values
may cause Westpac to incur higher credit losses
on lending and counterparty exposures.
Sections 5.2.5, 5.2.6
and 5.2.7
74-75
Other risks
• Westpac may be adversely affected by other
events such as changes in competition,
technology failures, fraud, supplier failures,
environmental factors, or reputational damage.
Sections 5.2.8,
5.2.10, 5.2.11, 5.2.12,
5.2.13 and 5.2.14
75-78
1.4 Key Differences Between Westpac Capital Notes and
Other Westpac investments or products
Topic
Summary
Further information
1.4.1 Differences
between savings
accounts,
term deposits,
Westpac
Subordinated
Notes 2012,
Westpac Capital
Notes and
Ordinary Shares
• There are differences between savings accounts,
term deposits, Westpac Subordinated Notes 2012,
Westpac Capital Notes and Ordinary Shares.
You should consider these differences in light of
your investment objectives, financial situation and
particular needs (including financial and taxation
issues) before deciding to invest in the Westpac
Capital Notes.
See table below
Westpac
Savings
Account
Westpac
Term Deposit
ASX code
Not quoted
on ASX
Legal form
Pages
15-16
Westpac
Subordinated
Notes 2012
Westpac
Capital Notes
Ordinary
Shares
Not quoted
on ASX
WBCHA
WBCPD1
WBC
Deposit
Deposit
Unsecured
subordinated
debt obligation
Unsecured
subordinated
debt obligation
Ordinary share
Protection under
the Banking Act or
Financial Claims
Scheme2
Yes2
Yes2
No
No
No
Term
At call
(usually)
One month
to five years
(usually)
10 years3
Perpetual with
the first possible
Scheduled
Conversion Date
in 8 years4
Perpetual
(no maturity
date)
Note:
1. Westpac has applied to have Westpac Capital Notes quoted on ASX and they are expected to trade under the code WBCPD.
2. For deposits made from 1 February 2012 up to an amount per account holder per ADI of $250,000.
3. Subject to possible early redemption by Westpac in certain circumstances with APRA’s prior written approval.
4. Subject to possible early Redemption (with APRA’s prior written approval), Transfer or Conversion in certain circumstances.
SECTION 1 Investment Overview
15
For personal use only
Investment
Overview
Westpac
Savings
Account
Westpac
Term Deposit
Issuer early
redemption option
No
No
Distribution/interest/
dividend rate
Variable
(usually)
Distribution/interest/
dividend payment
frequency
Westpac
Subordinated
Notes 2012
Westpac
Capital Notes
Ordinary
Shares
Yes, on 23 August
2017 and each
Interest Payment
Date after that
date, subject
to APRA’s prior
written approval
Yes, on 8 March
2019, subject
to APRA’s prior
written approval
No
Fixed
(usually)
Floating
Floating
Variable
dividends
are payable
Monthly
(usually)
End of term or
per annum or
monthly
Quarterly
Quarterly
Semi-annually
Are Distributions/
interest/dividends
discretionary?
No
No
No – however,
no distributions will
be paid if Westpac
is not solvent
immediately before
or would not be
solvent immediately
after payment
Yes
Yes
Transferable
No
No
Yes – quoted
on ASX
Yes – quoted
on ASX
Yes – quoted
on ASX
Investor’s ability to
withdraw or redeem
Yes
Yes, subject
to conditions
No
No
No
Ranking
See Section 1.1.13
Conversion into
Ordinary Shares
No
No
Yes, following
the Scheduled
Conversion Date,
a Capital Trigger
Event, a NonViability Trigger
Event or an
Acquisition Event,
subject to certain
conditions
N/A
16
No
If a Capital
Trigger Event or
Non‑Viability Trigger
Event occurs
and Conversion
of Notes is not
possible, all rights
in relation to those
Notes will be
terminated
Prospectus
For personal use only
1.5 Key features of the Offer and how to apply
Topic
Summary
Further information
Pages
1.5.1 How
is the Offer
structured
and who can
apply?
• The Offer consists of:
Sections 3.1 and 3.2
49-51
48-54
–– a Securityholder Offer – to Eligible
Securityholders;
–– a Broker Firm Offer – to Australian resident
retail clients of the Syndicate Brokers; and
–– an Institutional Offer – to Institutional Investors
invited by Westpac Institutional Bank.
• Applications made by Eligible Securityholders may
be scaled back by Westpac.
• There is no general public offer of the Notes.
However, Westpac reserves the right to accept
Applications from other persons at its discretion.
1.5.2 How to
apply?
• For information on how to apply for the Notes,
see Section 3 and the Application Forms.
Section 3
1.5.3 What are
the key dates
for the Offer?
• Please refer to page 3 for a list of important dates
associated with the Offer, including the expected
Opening Date, the Closing Dates, the Issue Date,
the dates when deferred and normal settlement
trading of the Notes will begin and the date by
which Holding Statements will be dispatched to
Holders.
Important Dates
1.5.4 Is there
a minimum
amount to be
raised?
• No. The Offer is for the issue of Notes to raise
approximately $1.25 billion with the ability to raise
more or less.
Section 3.7.2
1.5.5 Is
the Offer
underwritten?
• No.
Section 7.4
89-91
1.5.6 Is there
a minimum
Application
size?
• Yes. Applications must be for a minimum of 50
Notes ($5,000), and in increments of 10 Notes
thereafter ($1,000).
Section 3.1
49
1.5.7 Is
brokerage or
stamp duty
payable?
• No brokerage or stamp duty is payable to
Westpac on your Application. You may have to
pay brokerage on any subsequent trading of your
Notes on ASX after the Notes have been quoted
on ASX.
Section 3.5
52
SECTION 1 Investment Overview
3
52
17
For personal use only
Investment
Overview
18
Topic
Summary
Further information
1.5.8 What
are the tax
implications
of investing in
the Westpac
Capital Notes?
• A general description of the Australian taxation
consequences of investing in Notes is set out in
the Taxation Letter from Allens in Section 6.
Section 6
1.5.9 How
will I receive
confirmation of
my Allocation?
• Westpac will announce the basis of Allocation
by placing advertisements in major national and
metropolitan newspapers in Australia on or before
12 March 2013.
Sections 3.7.1
and 3.7.2
• If you are a Broker Firm Applicant you should
contact your Syndicate Broker to find out your
Allocation.
• If you have applied under the Securityholder
Offer, you should call the Westpac Capital Notes
Information Line (Monday to Friday, 8.30am to
5.30pm, Sydney time) on 1300 133 814 to find
out your Allocation.
Prospectus
Pages
79-86
52
For personal use only
2
Information
about Westpac
Capital Notes
The following is an overview of the key terms of the
Westpac Capital Notes.
The full Westpac Capital Notes Terms are contained in
Appendix B. Rights and liabilities attaching to the Notes
may also arise under the Corporations Act, ASX Listing
Rules and other applicable laws.
It is important that you read this Prospectus and the
Westpac Capital Notes Terms in full before deciding
to invest in the Notes. If you have any questions, you
should seek advice from your financial adviser or other
professional adviser before deciding to invest.
For personal use only
Information about
Westpac Capital Notes
This Section sets out:
2.1 Description of the Westpac Capital Notes
2.2 Distributions
2.3 Use of proceeds
2.4 Conversion on the Scheduled Conversion Date
2.5 Conversion other than on the Scheduled Conversion Date
2.6 Redemption or Transfer prior to the Scheduled Conversion Date
2.7 Regulatory treatment of the Westpac Capital Notes
2.8 Return on your investment generally
2.9 Ranking and voting rights of the Westpac Capital Notes
2.10 Comparison of the Westpac Capital Notes with certain other Westpac Tier 1 Capital Securities
2.11 Payment for Westpac Capital Notes
2.12 No set off against other amounts owed
2.13 Notes Deed Poll
2.14 Additional information
2.1 Description of the Westpac Capital Notes
Topic
Summary
Further information Pages
2.1.1 What are
the Westpac
Capital Notes?
The Westpac Capital Notes are fully paid, noncumulative, convertible, transferable, redeemable,
subordinated, perpetual, unsecured notes issued
by Westpac, which, if they are on issue at the time,
rank for payment in priority to Ordinary Shares in
a Winding Up.
Sections 2.2, 2.4,
2.5, 2.6 and 2.9.1
The Notes:
• offer Holders non-cumulative, floating rate
Distributions payable quarterly in arrear, which
are expected to be fully franked. Distributions
are discretionary and only payable subject to the
satisfaction of the Distribution Payment Conditions;
• will be Converted into Ordinary Shares on the
Scheduled Conversion Date1 subject to the
Scheduled Conversion Conditions being satisfied;
• are subject to earlier Conversion upon:
–– a Capital Trigger Event (without the Scheduled
Conversion Conditions needing to be satisfied);
–– a Non-Viability Trigger Event (without the
Scheduled Conversion Conditions needing
to be satisfied); or
–– an Acquisition Event (subject to the Second
Scheduled Conversion Condition, as it applies
to an Acquisition Event, being satisfied);
Note:
1. The first possible Scheduled Conversion Date will be 8 March 2021 – see clause 4.1 of the Westpac Capital Notes Terms.
20
PROSPECTUS
22-38,
41
For personal use only
Topic
Summary
Further information Pages
2.1.1 What are
the Westpac
Capital Notes?
(continued)
• may be Redeemed at the election of Westpac
in certain circumstances including:
–– on 8 March 2019 (the “Optional Redemption/
Transfer Date”);
–– following a Franking Event, Tax Event or
Regulatory Event, provided that Westpac has
obtained a supporting opinion of reputable
legal counsel or other tax adviser (as
applicable), experienced in such matters, or,
in the case of a Regulatory Event, confirmation
from APRA;
Such Redemptions are subject to Westpac
receiving APRA’s prior written approval. There
can be no certainty that APRA will provide its prior
written approval; and
• may be Transferred at Westpac’s election on
8 March 2019 (the “Optional Redemption/
Transfer Date”).
Ranking
In a Winding Up, if the Notes:
• are on issue at the time, the Notes will rank in
priority to Ordinary Shares, and equally with Equal
Ranking Capital Securities (which currently include
TPS 2003, TPS 2004, Westpac TPS, Westpac
SPS, Westpac SPS II and Westpac CPS) and
subordinated to claims of Senior Creditors; or
• have been Converted into Ordinary Shares, Holders
will become holders of Ordinary Shares and will
rank equally with other holders of Ordinary Shares.
2.1.2 Can
Westpac
Capital Notes
be traded
on ASX?
Westpac has applied for the Notes to be quoted on
ASX. It is expected that the Notes will trade under ASX
code ‘WBCPD’ however quotation is not guaranteed.
If ASX does not grant permission for the Notes to
be quoted, then the Notes will not be issued and
all Application Payments will be refunded (without
interest) to Applicants as soon as possible.
Sections 3.8.1 and
5.1.3
52,
64-65
If the Notes are quoted on ASX you will be able to
buy or sell Notes through your broker at the market
price at the time. The market price of the Notes may
fluctuate due to a number of factors. There can be
no assurances as to what that price will be.
SECTION 2 Information about Westpac Capital Notes
21
For personal use only
Information about
Westpac Capital Notes
Topic
Summary
Further information Pages
2.1.3 How do
you find out
your Allocation
of Westpac
Capital Notes?
If you are a Broker Firm Applicant and wish to find
out your Allocation of Notes prior to receiving your
Holding Statement, you should contact your Syndicate
Broker. Eligible Securityholder Applicants should
call the Westpac Capital Notes Information Line
(Monday to Friday, 8.30am to 5.30pm, Sydney time)
on 1300 133 814.
Section 3.8.2
2.1.4 Are
Westpac
Capital Notes
perpetual?
The Notes are perpetual instruments that may only be
Converted, Redeemed or Transferred in accordance
with the Westpac Capital Notes Terms.
Westpac Capital
Notes Terms clause
1.1
2.1.5 What are
the taxation
consequences
of investing
in, holding
or disposing
of Westpac
Capital Notes?
General information about the taxation consequences
of investing in the Notes is included in the Taxation
Letter from Allens in Section 6.
Section 6
53
111
79-86
The taxation consequences of investing in the Notes
will depend on your individual circumstances. You
should obtain your own taxation advice before you
invest in, hold, or dispose of Notes.
2.2 Distributions
22
Topic
Summary
Further information Pages
2.2.1 What are
Distributions?
Distributions on Notes are based on the Distribution
Rate and are expected to be paid quarterly in arrear.
Distributions are discretionary, non-cumulative
and only payable subject to the satisfaction of the
Distribution Payment Conditions.
Distributions are expected to be fully franked and
accordingly Holders are expected to receive cash
Distributions and franking credits.
Westpac Capital
Notes Terms
clause 3
PROSPECTUS
111-113
For personal use only
Topic
Summary
Further information Pages
2.2.2 How will
the Distribution
Rate be
determined?
The Distribution Rate is a floating rate and will be set
on the first Business Day of each Distribution Period
using the following formula:
Westpac Capital
Notes Terms
clause 3.1
Distribution
Rate
(90 day Bank Bill Rate + Margin) ×
(1 – Tax Rate)
90 day Bank
Bill Rate
The 90 day Bank Bill Rate on
the first Business Day of the
Distribution Period (except for the
first Distribution Period, where
the 90 day Bank Bill Rate will be
determined on the Issue Date)
Margin
The Margin is 3.20% per annum
Tax Rate
The Australian corporate tax
rate applicable to the franking
account of Westpac as at the
relevant Distribution Payment Date
expressed as a decimal. As at the
date of this Prospectus, the relevant
Tax Rate is 30% or, expressed as a
decimal in the formula, 0.30
111-112
As an example, given the Margin of 3.20% per annum,
if the 90 day Bank Bill Rate on the Issue Date is the
same as on 5 February 2013 and assuming that the
Distribution will be fully franked, the Distribution Rate for
the first Distribution Period from (but excluding) the Issue
Date to (and including) 8 June 2013 would be calculated
as follows1:
90 day Bank Bill Rate
at 5 February 2013
2.9367% per annum
Plus the Margin
3.2000% per annum
6.1367% per annum
Multiplied by (1 – Tax Rate)
Distribution Rate
× 0.70
4.2957% per annum
Note:
1. The calculation of the Distribution Rate will be rounded to four decimal places. The Distribution Rate above is for illustrative purposes only and does not indicate the actual
Distribution Rate. It is not a guarantee or forecast of the actual Distribution Rate that may be achieved. The actual Distribution Rate may be higher or lower than this and may
vary each Distribution Period depending on the applicable 90 day Bank Bill Rate, the Margin and the Tax Rate.
SECTION 2 Information about Westpac Capital Notes
23
For personal use only
Information about
Westpac Capital Notes
24
Topic
Summary
Further information Pages
2.2.2 How will
the Distribution
Rate be
determined?
(continued)
Impact of franking credits
Distributions are expected to be fully franked and
accordingly Holders are expected to receive cash
Distributions and franking credits. The franking credits
represent each Holder’s share of tax paid by Westpac
on the profits from which the cash Distribution is paid.
If the potential value of the franking credits is taken
into account in full, the Distribution Rate of 4.2957%
per annum in the example above would be equivalent
to an unfranked Distribution Rate of approximately
6.1367% per annum. However, you should be aware
that the potential value of the franking credits does
not accrue to you at the same time as you receive
the cash Distribution.
You should also be aware that your ability to use the
franking credits, either as an offset to your tax liability
or by claiming a refund after the end of the year of
income, will depend on your individual tax position.
You should seek professional advice in relation to
your tax position. Investors should also refer to the
Taxation Letter from Allens in Section 6.
2.2.3 How will
Distributions
be calculated?
Distributions will be calculated as follows:
Distribution Rate × Face Value × N
365
Distribution
Rate
See Section 2.2.2
Face Value
$100 per Westpac Capital Note
N
The number of days in the
Distribution Period
Distribution
Period
The period from (but excluding)
the previous Distribution Payment
Date, or from (but excluding) the
Issue Date in the case of the
first Distribution Period, to (and
including) the next Distribution
Payment Date
Distribution
Payment
Date
See Section 2.2.9
PROSPECTUS
Westpac Capital
Notes Terms
clause 3.1
111-112
For personal use only
Topic
Summary
Further information Pages
2.2.3 How will
Distributions
be calculated?
(continued)
As an example, if the franked Distribution Rate was
4.2957% per annum as calculated in Section 2.2.2,
then the cash amount of the Distribution on each Note
for a typical Distribution Period would be calculated as
follows2,3:
1
Distribution Rate
Multiplied by the Face Value
Multiplied by the number of days
in the Distribution Period (N)
Divided by
Cash amount of Distribution
4.2957% per annum
× $100
× 90
÷ 365
$1.0592
2.2.4 Will
Distributions
be fully
franked?
Westpac expects, but does not guarantee, that
Distributions will be fully franked. If there is a change
in the Tax Rate, the Distribution Rate will change
accordingly.
Westpac Capital
111-112
Notes Terms clauses
3.1 and 3.2
2.2.5 Will
Holders receive
franking credits
in respect of
Distributions?
It is expected that Holders will receive franking
credits in respect of Distributions (other than where
a Holder’s lack of entitlement to franking credits is
a result of an act by, or circumstance affecting, the
Holder). Westpac has applied for a public Class Ruling
on behalf of Australian resident Holders which should
confirm the ability of Holders to utilise the franking
credits attached to those Distributions, subject to
satisfaction of certain criteria.
Section 6
79-86
Note:
1. Australian resident taxpayers may be entitled to utilise franking credits. Australian resident taxpayers that are individuals or complying superannuation entities may be entitled
to a refund of excess franking credits. Investors should seek professional advice in relation to their tax position. Reference should also be made to the Taxation Letter from
Allens in Section 6.
2. Distribution Periods will generally have 90-92 days in them.
3. All calculations of payments will be rounded to four decimal places. Any fraction of a cent is disregarded when paying Distributions on a Holder’s aggregate holding of
Westpac Capital Notes. The Distribution Rate on which this calculation is based, and the Distribution, are for illustrative purposes only and do not indicate the actual
Distribution Rate or Distribution. It is not a guarantee or forecast of the actual Distribution that may be obtained.
SECTION 2 Information about Westpac Capital Notes
25
For personal use only
Information about
Westpac Capital Notes
Topic
Summary
Further information Pages
2.2.6 What
happens if
Distributions
are not fully
franked?
If a Distribution is not fully franked (other than
because of an act by, or circumstance affecting, the
particular Holder), then the amount of the Distribution
entitlement would be adjusted to compensate for the
unfranked amount.
The formula for determining the adjusted
Distribution is:
Westpac Capital
Notes Terms
clause 3.2
112
Adjusted
Distribution
Distribution
1 – [Tax Rate × (1 – Franking Rate)]
Distribution The Distribution entitlement for
that Distribution Period prior to
adjustment – see Section 2.2.3
Tax Rate
See Section 2.2.2
Franking
Rate
The percentage of the adjusted
Distribution that would carry
franking credits
2.2.7 Will
the Margin
change?
No. The Margin will not change from 3.20% per annum.
Westpac Capital
Notes Terms
clause 3.1
111-112
2.2.8 What
is the 90 day
Bank Bill Rate?
The 90 day Bank Bill Rate is a key benchmark interest
rate for the Australian money market. It is based on
an average of rates at which major Australian financial
institutions lend short-term cash to each other over a
90-day period. This rate changes to reflect the supply
and demand within the cash and currency markets.
Westpac Capital
Notes Terms
clause 3.1
111-112
2.2.9 When will
Distributions
be paid?
Distributions are payable quarterly in arrear on the
Distribution Payment Dates, subject to satisfaction
of the Distribution Payment Conditions.
The Distribution Payment Dates are:
• each 8 March, 8 June, 8 September and
8 December of each year commencing on
8 June 2013, until the Notes are Converted
or Redeemed; and
• on the Conversion Date or the Redemption Date,
if either date is not 8 March, 8 June, 8 September
or 8 December.
Westpac Capital
Notes Terms
clause 3.5
112
If a Distribution Payment Date is not a Business Day,
then the Distribution will be paid on the next Business
Day (without any interest in respect of the delay).
The first Distribution Period runs from (but excluding)
the Issue Date to (and including) 8 June 2013.
26
PROSPECTUS
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Topic
Summary
Further information Pages
2.2.9 When will
Distributions
be paid?
(continued)
Thereafter, each Distribution Period runs from (but
excluding) the previous Distribution Payment Date
to (and including) the next Distribution Payment Date.
The Distribution Rate for the first Distribution Period
will be determined on the Issue Date.
After the first Distribution Period, the Distribution
Rate will be determined on the first Business Day
of each Distribution Period.
Distributions will be paid to persons who are Holders
on the Record Date in respect of the Distribution.
2.2.10 How will
Distributions
be paid?
Distributions will be paid in Australian dollars.
Westpac will only pay Distributions directly into
an Australian dollar account of a financial institution.
If you are Allotted any Notes, when you are sent your
Holding Statement you will receive a form on which
you should provide your Australian dollar financial
institution account details.
If you do not provide these account details to
the Registry, or if any Distribution paid to you is
unsuccessful, then you will be sent a notice advising
you of the amount of the Distribution. In that case
the funds will be held in a bank account (maintained
by Westpac) as a non-interest bearing deposit
until such time as you provide appropriate account
details or Westpac is entitled to or obliged to deal
with the amount in accordance with the law relating
to unclaimed money.
Westpac reserves the right to vary the way in
which any Distribution is paid in accordance with
the Westpac Capital Notes Terms (provided that
Distributions must always be paid in cash).
Section 3.9.1
2.2.11 Will
Distributions
always be
paid?
Distributions are discretionary, non-cumulative
and are only payable subject to satisfaction of
the Distribution Payment Conditions, being:
• Westpac’s absolute discretion;
• the payment of the Distribution not resulting
in a breach of Westpac’s capital requirements
under APRA’s prudential standards as they
are applied to the Westpac Group at the time
of the payment;
• the payment of the Distribution not resulting in
Westpac becoming, or being likely to become,
insolvent; and
• APRA not otherwise objecting to the payment.
Westpac Capital
Notes Terms
clause 3.3
Westpac Capital
Notes Terms
clause 10
53,
123-124
112
Distributions will also be subject to the Corporations
Act and any other law regulating the payment of
Distributions.
SECTION 2 Information about Westpac Capital Notes
27
For personal use only
Information about
Westpac Capital Notes
Topic
Summary
Further information Pages
2.2.12 What
happens if a
Distribution is
not paid in full?
Payments of Distributions are within the absolute
discretion of Westpac and are non-cumulative. If a
Distribution is not paid in full because the Distribution
Payment Conditions are not satisfied or because of
any other reason, Holders will not be entitled to receive
the unpaid portion of that Distribution. No interest
accrues on any unpaid Distributions and Westpac has
no liability to the Holder and the Holder has no claim in
respect of such non-payment.
Westpac Capital
Notes Terms
clause 3.4
112
2.2.13 What
is the
consequence
for Westpac
if a Distribution
is not paid?
If for any reason a Distribution has not been paid in
full on the relevant Distribution Payment Date, Westpac
must not (other than in certain limited circumstances):
• determine or pay any Dividends; or
• undertake any discretionary Buy Back or Capital
Reduction,
unless the amount of the unpaid Distribution is paid
in full within 20 Business Days of that Distribution
Payment Date or:
Westpac Capital
Notes Terms
clauses 3.7 and 3.8
113
(a)all Notes have been Converted or Redeemed;
(b)on a subsequent Distribution Payment Date,
a Distribution for the subsequent Distribution
Period is paid in full; or
(c)a Special Resolution of the Holders has been
passed approving such action,
and, in respect of the actions contemplated by
paragraphs (a), (b) and (c), APRA does not otherwise
object.
2.3 Use of proceeds
28
Topic
Summary
Further information Pages
2.3.1 Why
is Westpac
issuing the
Westpac
Capital Notes?
Westpac is issuing the Notes to raise regulatory
capital which satisfies the requirements of APRA.
The proceeds received under the Offer will be used
by Westpac for general business purposes.
Section 4.2.4
PROSPECTUS
59-60
For personal use only
2.4 Conversion on the Scheduled Conversion Date
Topic
Summary
Further information Pages
2.4.1 What is
Conversion?
Conversion means the conversion of the Notes into
a variable number of Ordinary Shares in accordance
with the formula contained in clause 8.1(a) of the
Westpac Capital Notes Terms.
On Conversion of a Note, the Holder’s rights (including
to Distributions) in relation to that Note will be
immediately and irrevocably terminated. However,
the Holder will be issued with Ordinary Shares that
will have the same rights as other Ordinary Shares
on issue at the relevant time.
Westpac Capital
Notes Terms
clause 8
118-121
2.4.2 When is
Conversion
expected
to occur?
The Notes do not have a maturity date but have
a Scheduled Conversion Date. Conversion is expected
to occur on the Scheduled Conversion Date.
Westpac Capital
Notes Terms
clause 4.1
113
2.4.3 When is
the Scheduled
Conversion
Date?
The Scheduled Conversion Date will be the earlier of:
• 8 March 2021; and
• the first Distribution Payment Date after 8 March
2021,
on which the Scheduled Conversion Conditions
are satisfied.
Westpac Capital
Notes Terms
clause 4.1
113
SECTION 2 Information about Westpac Capital Notes
29
For personal use only
Information about
Westpac Capital Notes
Topic
Summary
Further information Pages
2.4.4 What are
the Scheduled
Conversion
Conditions?
The Scheduled Conversion Conditions in relation
to a potential Scheduled Conversion Date are
satisfied where:
• First Scheduled Conversion Condition:
The VWAP of Ordinary Shares on the 25th
Business Day before (but not including) the
potential Scheduled Conversion Date is greater
than 56.12% of the Issue Date VWAP; and
• Second Scheduled Conversion Condition:
The VWAP of Ordinary Shares during the
20 Business Days before (but not including) the
potential Scheduled Conversion Date is greater
than 50.51% of the Issue Date VWAP.
Westpac Capital
Notes Terms
clause 4.2
113-114
The following diagram illustrates the timeframes that
are relevant for the Scheduled Conversion Conditions
using the date 8 March 2021 as a potential Scheduled
Conversion Date. These dates are indicative
only and may change.
1 February 2021
8 February 2021
5 March 2021
8 March 2021
25th Business Day before
a potential Scheduled
Conversion Date
20th Business Day before
a potential Scheduled
Conversion Date
Last Business Day of VWAP
Period (Business Day before
a potential Scheduled
Conversion Date)
Potential Scheduled
Conversion Date
(subject to satisfaction of
the Scheduled Conversion
Conditions)
20 Business Day VWAP Period
First Scheduled Conversion Condition
Second Scheduled Conversion Condition
The VWAP of Ordinary Shares on
the 25th Business Day before (but not
including) a potential Scheduled
Conversion Date is greater than 56.12%
of the Issue Date VWAP
The VWAP of Ordinary Shares during the
20 Business Days before (but not including)
a potential Scheduled Conversion Date
is greater than 50.51% of the Issue
Date VWAP
2.4.5 What is
the purpose of
the Scheduled
Conversion
Conditions?
The Scheduled Conversion Conditions are intended
to ensure that upon Conversion on the Scheduled
Conversion Date, Holders will receive Ordinary Shares
worth approximately $101.01 per Note (based on the
initial Face Value of $100 and the volume weighted
average price of Ordinary Shares during the 20
Business Days before the Scheduled Conversion Date,
with the benefit of a 1% discount).
Westpac Capital
Notes Terms
clause 4.2
113-114
2.4.6 What
happens if the
Scheduled
Conversion
Conditions are
not satisfied?
If the Scheduled Conversion Conditions are not
satisfied on 8 March 2021, Conversion will not occur
until the next Distribution Payment Date on which the
Scheduled Conversion Conditions are satisfied.
Westpac Capital
Notes Terms
clauses 4.1 and 4.2
113-114
30
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Topic
Summary
Further information Pages
2.4.7 What is
the VWAP and
the Issue Date
VWAP?
In general terms, VWAP refers to the average of the
daily volume weighted average sale prices of Ordinary
Shares sold on ASX during the relevant period.
The Issue Date VWAP means the VWAP of Ordinary
Shares during the 20 Business Days on which trading
in Ordinary Shares took place immediately preceding
(but not including) the Issue Date (as adjusted in
accordance with the Westpac Capital Notes Terms).
The satisfaction of the Scheduled Conversion
Conditions on a potential Scheduled Conversion
Date will depend on the price of Ordinary Shares.
For example, if the Issue Date VWAP is $26.00,
then, for the First Scheduled Conversion Condition
and Second Scheduled Conversion Condition to be
satisfied:
• the VWAP for the First Scheduled Conversion
Condition would need to be at least $14.60
(56.12% of the Issue Date VWAP); and
• the VWAP for the Second Scheduled Conversion
Condition would need to be at least $13.14
(50.51% of the Issue Date VWAP).
118-121,
Westpac Capital
131, 134
Notes Terms
clauses 8 and 15.2
(definition of “Issue
Date VWAP” and
“VWAP”)
This example is for illustrative purposes only
and does not indicate whether or not the Scheduled
Conversion Conditions will actually be satisfied
in respect of a potential Scheduled Conversion Date.
2.4.8 How
many Ordinary
Shares will
I receive if
the Westpac
Capital Notes
are Converted?
Upon Conversion, Holders will receive for each Note
they hold a variable number of Ordinary Shares
calculated using the following formula:
Westpac Capital
Notes Terms
clause 8.1
118-119
Face Value
0.991 × VWAP
Face Value
$100 per Westpac Capital Note
VWAP
The VWAP during the VWAP Period
VWAP Period
In the case of a Scheduled
Conversion the period of 20
Business Days on which trading
in Ordinary Shares took place
immediately preceding (but
not including) the Scheduled
Conversion Date
Where the total number of Ordinary Shares to be
issued to a Holder in respect of all of that Holder’s
Notes being Converted includes a fraction, that fraction
will be disregarded.
Note:
1. This reflects a conversion discount of 1% (or 0.01 expressed as a decimal).
SECTION 2 Information about Westpac Capital Notes
31
For personal use only
Information about
Westpac Capital Notes
Topic
Summary
Further information Pages
2.4.9 Is there
a limit on
the number
of Ordinary
Shares I will
receive on a
Scheduled
Conversion
Date?
Yes. The Terms provide that the number of Ordinary
Shares that may be issued on Conversion is subject to
a Maximum Conversion Number. However, due to the
operation of the Scheduled Conversion Conditions, it
is not possible for Conversion to occur if the Maximum
Conversion Number would be exceeded. This means
that if the Scheduled Conversion Conditions are met
and Conversion does occur on a Scheduled Conversion
Date, Holders will always receive a number of Ordinary
Shares that is less than the Maximum Conversion
Number. This is intended to ensure that upon Conversion
on a Scheduled Conversion Date, Holders will receive
Ordinary Shares worth approximately $101.01 per Note
and not some lesser value.
Sections 2.4.4
and 2.4.5
Westpac Capital
Notes Terms
clauses 4.2(a)
and 8.1
30,
113-114,
118-119
2.5 Conversion other than on the Scheduled Conversion Date
Topic
Summary
Further information Pages
2.5.1
Conversion
following an
Acquisition
Event
Westpac must Convert all (but not some only) of the
Notes following an Acquisition Event.
Westpac Capital
Notes Terms
clause 5.7
2.5.2 When will
an Acquisition
Event occur?
An Acquisition Event will occur where:
• a takeover bid is made for Ordinary Shares and the
offer is, or becomes, unconditional and the bidder
has a relevant interest in more than 50% of the
Ordinary Shares on issue; or
• a court orders the holding of one or more meetings
to approve a scheme of arrangement under Part
5.1 of the Corporations Act, which scheme would
result in a person having a relevant interest in more
than 50% of the Ordinary Shares that will be on
issue after the scheme is implemented and either:
–– the relevant classes of members of Westpac
pass a resolution approving the scheme; or
–– an independent expert issues a report that the
proposals in connection with the scheme are in the
best interests of the holders of Ordinary Shares; or
–– Holders are treated as being a separate class
for the purposes of a scheme of arrangement in
respect of the replacement of Westpac as the
ultimate holding company of the Westpac Group.
128-129
Westpac Capital
Notes Terms
clause 15.2
(definition of
“Acquisition Event”)
However, an Acquisition Event will not have occurred
where Westpac is replaced as the ultimate holding
company of the Westpac Group by an Approved
Successor in accordance with the Westpac Capital
Notes Terms.
32
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116
For personal use only
Topic
Summary
Further information Pages
2.5.3What
conditions apply
to Conversion
following an
Acquisition
Event?
The Second Scheduled Conversion Condition is
deemed to apply following an Acquisition Event such
that Conversion will not occur unless the VWAP of
Ordinary Shares during the 20 Business Days before
(but not including) the Acquisition Event Conversion
Date is greater than 20.20% of the Issue Date VWAP.
Westpac Capital
Notes Terms
clauses 4.2(a)(ii)
and 5.7(b)
114, 116
2.5.4 How
many Ordinary
Shares will
I receive on
Conversion
following an
Acquisition
Event?
If Notes are Converted following an Acquisition Event,
Holders will receive a variable number of Ordinary
Shares on the Conversion Date equal to the Conversion
Number calculated in the same manner as if Conversion
was occurring on the Scheduled Conversion Date (see
Section 2.4.8), subject to the following adjustments:
• the VWAP Period will be 20 Business Days
on which trading in Ordinary Shares took place
immediately preceding, but not including, the
Acquisition Event Conversion Date;
• the First Scheduled Conversion Condition
will not apply; and
• the Second Scheduled Conversion Condition
will be applied as if the reference to 50.51%
were a reference to 20.20%.
Westpac Capital
Notes Terms
clauses 5.7(b)
and 8
116,
118-121
2.5.5Is there
a limit on
the number
of Ordinary
Shares I will
receive on
Conversion
following an
Acquisition
Event?
Yes. The Terms provide that the number of Ordinary
Shares that may be issued on Conversion is subject
to a Maximum Conversion Number. However, due to
the operation of the Second Scheduled Conversion
Condition (as it applies to an Acquisition Event), it is
not possible for Conversion to occur if the Maximum
Conversion Number would be exceeded. This means
that if the Second Scheduled Conversion Condition
is met and therefore Conversion does occur on the
Acquisition Event Conversion Date, Holders will always
receive a number of Ordinary Shares that is less than
the Maximum Conversion Number. This is intended to
ensure that upon Conversion on an Acquisition Event
Conversion Date, Holders will receive Ordinary Shares
worth approximately $101.01 per Note and not some
lesser value.
Sections 2.4.4
and 2.4.5
Westpac Capital
Notes Terms
clauses 4.2(a)(ii),
5.7(b) and 8.1
30,
114, 116,
118-119
2.5.6
Conversion
following a
Capital Trigger
Event or a
Non‑Viability
Trigger Event
Some or all of the Notes must also be Converted
immediately following:
• a Capital Trigger Event; or
Westpac Capital
114-115
Notes Terms clauses
5.1 and 5.2
• a Non-Viability Trigger Event.
The proportion of Notes that will be Converted in these
circumstances may be determined by APRA (in the
case of a Non-Viability Trigger Event) or be dependent
on restoration of Westpac’s Common Equity Tier 1
Capital Ratio to above 5.125% (on a Level 1 or Level 2
basis) (in the case of a Capital Trigger Event).
SECTION 2 Information about Westpac Capital Notes
33
For personal use only
Information about
Westpac Capital Notes
34
Topic
Summary
Further information Pages
2.5.7 When
will a Capital
Trigger Event
occur?
A Capital Trigger Event will occur when Westpac
determines, or APRA notifies Westpac in writing
that it believes, Westpac’s Common Equity Tier 1
Capital Ratio is equal to or less than 5.125% on
either a Level 1 or Level 2 basis.
Under Basel III, Westpac’s estimated Common Equity
Tier 1 Capital Ratio on a Level 2 basis was 8.16%
at 30 September 2012, which equated to a surplus
of more than $9.3 billion above the Common Equity
Tier 1 Capital Ratio of 5.125% (applicable to a Capital
Trigger Event) on 30 September 2012. Under Basel
III, Westpac’s estimated Common Equity Tier 1 Capital
Ratio on a Level 1 basis was slightly lower at 8.15%,
which was also considerably above the Capital Trigger
Event level of 5.125%.
Westpac Capital
Notes Terms clause
15.2 (definition of
“Capital Trigger
Event”)
130
2.5.8 When will
a Non‑Viability
Trigger Event
occur?
A Non-Viability Trigger Event will occur when APRA
notifies Westpac in writing that it believes Conversion
of some or all Notes (or conversion or write-down of
other capital instruments of the Westpac Group) or a
public sector injection of capital, or equivalent support,
is necessary because, without it, Westpac would
become non-viable.
Whether a Non-Viability Trigger Event will occur
is at the discretion of APRA and there are currently
no Australian precedents for this.
Westpac Capital
Notes Terms clause
15.2 (definition
of “Non-Viability
Trigger Event”)
132
2.5.9 Do the
Scheduled
Conversion
Conditions
apply following
a Capital
Trigger Event
or Non-Viability
Trigger Event?
No, the Scheduled Conversion Conditions do not need
to be satisfied following a Capital Trigger Event or NonViability Trigger Event. Conversion must occur following
such events.
Westpac Capital
Notes Terms
clause 5.3
115
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Topic
Summary
Further information Pages
2.5.10 How
many Ordinary
Shares will
I receive on
Conversion
following
a Capital
Trigger Event
or Non‑Viability
Trigger Event?
Conversion as a result of a Capital Trigger Event or
a Non‑Viability Trigger Event is not subject to the
Scheduled Conversion Conditions.
If Notes are Converted following a Capital Trigger
Event or Non-Viability Trigger Event then in respect
of each Note that is Converted, Holders will receive a
number of Ordinary Shares equal to the lower of:
• the Maximum Conversion Number; and
• the Conversion Number calculated in the same
manner as if Conversion was occurring on
the Scheduled Conversion Date (see Section 2.4.8),
subject to the following amendments:
–– the VWAP Period will be the 5 Business
Days in which trading of Ordinary Shares
took place on ASX preceding, but not including,
the Capital Trigger Event Conversion Date or
Non-Viability Trigger Event Conversion Date,
as applicable; and
–– the Scheduled Conversion Conditions will
not apply.
Limiting the number of Ordinary Shares to the
Maximum Conversion Number means that Holders
may receive a number of Ordinary Shares that have
a market value that is less than the Face Value.
Westpac Capital
Notes Terms
clauses 5.5 and 8
115-116,
118-121
2.5.11 Is there
a limit on
the number
of Ordinary
Shares I will
receive on
Conversion
following a
Capital Trigger
Event or NonViability Trigger
Event?
Yes. The Maximum Conversion Number is used to
limit the number of Ordinary Shares to be issued on
Conversion.
Section 2.5.12
Westpac Capital
Notes Terms
clause 8.1
36,
118-119
SECTION 2 Information about Westpac Capital Notes
35
For personal use only
Information about
Westpac Capital Notes
36
Topic
Summary
Further information Pages
2.5.12 What is
the Maximum
Conversion
Number in
the case of a
Capital Trigger
Event or NonViability Trigger
Event?
The Maximum Conversion Number is calculated
using the following formula:
Westpac Capital
Notes Terms
clause 8.1
118-119
Westpac Capital
Notes Terms
clause 5.6
116
Face Value
Relevant Percentage × Issue Date VWAP
Face Value
$100
Relevant
Percentage
If Conversion is occurring
on a Capital Trigger Event
Conversion Date or a Non-Viability
Event Conversion Date: 0.20
Issue Date
VWAP
The VWAP of Ordinary Shares for
the 20 Business Days on which
trading in Ordinary Shares took
place immediately preceding, but
not including, the Issue Date (as
adjusted in accordance with the
Westpac Capital Notes Terms)
The Maximum Conversion Number may be adjusted
up or down to reflect transactions affecting the
capital of Westpac (including bonus issues, share
splits, consolidations or other similar transactions not
involving any cash payment to or by holders of Ordinary
Shares) as set out in the Westpac Capital Notes Terms.
2.5.13 What
happens if
Westpac is
unable to issue
Ordinary Shares
following a
Capital Trigger
Event or
Non‑Viability
Trigger Event?
If for any reason Conversion of Notes is not possible
(for example due to applicable laws, order of a court
or action of any government authority) and Westpac
is not able to issue the Ordinary Shares within
5 Business Days following a Capital Trigger Event or
Non-Viability Trigger Event, then the Holder’s rights
(including to Distributions) in relation to those Notes
are immediately and irrevocably terminated. Your
investment will lose all of its value and you will not
receive any compensation.
PROSPECTUS
For personal use only
2.6 Redemption or Transfer prior to the Scheduled
Conversion Date
Topic
Summary
Further information Pages
2.6.1 In what
circumstances
can Redemption
or Transfer
occur prior to
the Scheduled
Conversion
Date?
Westpac may elect:
• to Redeem or Transfer all or some of the Notes on
8 March 2019 (the “Optional Redemption/Transfer
Date”); or
• to Redeem all (but not some) of the Notes following
a Franking Event, Tax Event or Regulatory Event.
Redemption is subject to Westpac receiving APRA’s
prior written approval. There can be no certainty that
APRA will provide its prior written approval.
Westpac Capital
Notes Terms
clauses 6 and 7
2.6.2 What is
Redemption?
Redemption means Westpac will pay to Holders the
Face Value for each Note Redeemed.
Redemption is subject to Westpac receiving APRA’s
prior written approval. There can be no certainty that
APRA will provide its prior written approval.
Holders cannot request Redemption of their Notes.
117-118,
Westpac Capital
132
Notes Terms
clauses 6.3, 6.5
and 15.2 (definition
of “Redemption”)
2.6.3 What is
Transfer?
Transfer means Westpac will arrange for a
Nominated Party to undertake to purchase from
Holders all Notes for the Face Value. On Transfer,
Holders will receive the Face Value ($100) for
each Note from the Nominated Party.
If the Nominated Party does not pay the Face Value
to Holders on the Optional Redemption/Transfer Date,
the Transfer will not proceed and Holders will continue
to hold their Notes.
The Nominated Party may not be a member
of the Westpac Group.
Holders cannot request a Transfer of Notes.
Westpac Capital
Notes Terms
clauses 7 and 15.2
(definition
of “Transfer”)
118,
134
2.6.4 What is a
Franking Event
or Tax Event?
A Franking Event will occur if Westpac determines
(as supported by advice from reputable legal counsel
or other tax adviser) that as a result of a change or
proposed change in, or amendment or proposed
amendment to, the laws of Australia or their application
(including as a result of a court decision) which was
not expected by Westpac at the Issue Date and has or
is expected to become effective on or after the Issue
Date, there is a material risk that any Distribution would
not be a frankable distribution within the meaning
of Division 202 of the Tax Act.
A Tax Event will occur if Westpac determines (as
supported by advice from reputable legal counsel or
other tax adviser) that there is a material risk that the
Westpac Group will incur more than an insubstantial
increase in costs or taxes in relation to the Notes that
it had not expected at the Issue Date.
Westpac Capital
Notes Terms clause
15.2 (definitions of
“Franking Event”
and “Tax Event”)
131,
133
SECTION 2 Information about Westpac Capital Notes
117-118
37
For personal use only
Information about
Westpac Capital Notes
38
Topic
Summary
Further information Pages
2.6.5 What is
a Regulatory
Event?
A Regulatory Event will occur if:
• as a result of an amendment to, clarification of
or change or prospective change of Australian
law or regulations or an Administrative Action that
was not expected by Westpac at the Issue Date,
additional requirements would be imposed on the
Westpac Group in relation to the Notes, or there
would be a negative impact on the Westpac Group
which Westpac determines (as supported by advice
from reputable legal counsel or confirmation from
APRA), at its sole discretion, to be unacceptable; or
• Westpac determines (as supported by advice
from reputable legal counsel or confirmation from
APRA) that all, some or a proportion of all or some
Notes are not or will not be treated as Additional
Tier 1 Capital of the Westpac Group under APRA’s
prudential standards, other than as a result of a
change of treatment expected by Westpac as at the
Issue Date.
Westpac Capital
Notes Terms clause
15.2 (definition of
“Regulatory Event”)
2.6.6 What
happens if
an Approved
Successor is
put in place?
Where Westpac is replaced as the ultimate holding
company of the Westpac Group by an Approved
Successor and certain other conditions are satisfied,
Conversion of Notes will not be triggered but Westpac
may instead be allowed to make amendments
(provided APRA’s prior written approval is obtained)
to substitute the Approved Successor as the debtor
in respect of the Notes and the issuer of the ordinary
shares issued on Conversion and to make certain other
amendments to the Westpac Capital Notes Terms.
Accordingly, if:
• Westpac is replaced by an Approved Successor
as the ultimate holding company of the Westpac
Group; and
• a substitution of the Approved Successor as
the debtor in respect of the Notes and the issuer of
the ordinary shares on Conversion is effected under
the Westpac Capital Notes Terms,
Westpac Capital
Notes Terms
clauses 5.8
and 12.4
Holders will be obliged to accept Approved Successor
Shares on Conversion and will not receive Ordinary
Shares on Conversion.
PROSPECTUS
132
116,
125-126
For personal use only
2.7 Regulatory treatment of the Westpac Capital Notes
Topic
Summary
Further information Pages
2.7.1 Who is
APRA?
APRA is the prudential regulator of the Australian
financial services industry. It oversees banks,
credit unions, building societies, general insurance
and reinsurance companies, life insurance,
friendly societies, and most members of the
superannuation industry.
Section 4.2.1
58-59
2.7.2 What
is regulatory
capital?
Capital is the cornerstone of an ADI’s financial
strength. It supports an ADI’s operations by providing
a buffer to absorb unanticipated losses from its
activities and, in the event of problems, assists
the ADI to continue to operate in a sound and viable
manner while problems are addressed or resolved.
For regulatory capital purposes, Total Capital is the
sum of Tier 1 Capital and Tier 2 Capital. Tier 1 Capital
is the sum of Common Equity Tier 1 Capital and
Additional Tier 1 Capital. Tier 1 Capital is generally
considered a higher quality capital than Tier 2 Capital.
Sections 4.2.1, 4.2.3
and 4.2.6
58-59,
60-61
2.7.3 What
is Additional
Tier 1 Capital?
Additional Tier 1 Capital comprises high quality
components of capital that provide a permanent and
unrestricted commitment of funds, are freely available
to absorb losses, rank behind the claims of depositors
and other more senior creditors in a Winding Up and
provide fully discretionary capital distributions.
Additional Tier 1 Capital must be the most subordinated
instrument issued by Westpac other than Ordinary
Shares.
Section 4.2.3
59
2.7.4 How are
the Westpac
Capital Notes
treated by
APRA for
regulatory
capital
purposes?
On 28 September 2012, APRA published its
final Basel III prudential standards which include
a number of changes to the eligibility criteria for capital
instruments, including stricter criteria for instruments
to qualify as Additional Tier 1 Capital. The new
requirements commenced on 1 January 2013.
APRA has confirmed that the Notes will be eligible for
inclusion as Additional Tier 1 Capital.
Sections 4.2.2 and
4.2.3
59
SECTION 2 Information about Westpac Capital Notes
39
For personal use only
Information about
Westpac Capital Notes
2.8 Return on your investment generally
40
Topic
Summary
Further information Pages
2.8.1 Are
Distributions
and your
investment
in the Westpac
Capital Notes
guaranteed?
No. Distributions and amounts invested in the Notes
are not guaranteed by Westpac or any other member
of the Westpac Group and are not guaranteed or
insured by any government agency or any other
person.
The value of the Notes as quoted on ASX may be
lower or higher than the Face Value paid by you for
the Notes. This may be due to a number of factors
including prevailing interest rates, other economic
factors, Westpac’s financial performance and
position, the Distributions actually paid and other
matters.
In certain circumstances the Notes will be Converted.
In these circumstances, you will be issued with
Ordinary Shares and therefore directly exposed to
movements in the price of Ordinary Shares traded on
ASX and the financial performance and position of
Westpac.
Sections 2.2.11,
5.1.1, 5.1.3, 5.1.4
and 5.1.5
27,
64-65
2.8.2 Will
you be able
to request
Conversion,
Redemption
or Transfer of
your Westpac
Capital Notes
once you have
invested in
them?
No. Holders have no right to request or require
Westpac to Convert, Redeem or arrange for a Transfer
of their Notes. To realise your investment, you can
sell your Notes on ASX at the prevailing market price
subject to the liquidity of that market. There can be no
assurance as to the liquidity or the market price for the
Notes. The market price of the Notes may be higher
or lower than the Face Value, and will depend, among
other things, on the level of supply and demand for the
Notes.
Sections 5.1.3,
5.1.4 and 5.1.12
64-65,
67
2.8.3 Is it
possible that
Conversion,
Redemption or
Transfer will not
occur?
Yes. If Westpac has not elected to Redeem or
Transfer Notes, APRA has not provided its prior
written approval for Redemption, the Scheduled
Conversion Conditions are not satisfied, or a
Capital Trigger Event, Non-Viability Trigger Event
or Acquisition Event does not occur, Holders will
not have their Notes Converted, Redeemed or
Transferred and will hold their Notes until Conversion
subsequently occurs (if at all), which may be
dependent upon the future Ordinary Share price.
Additionally, in the unlikely event of a Winding
Up, it is possible that Conversion, Redemption or
Transfer may not occur. For example, Westpac may
be prevented from issuing Ordinary Shares after
the commencement of a Winding Up unless a court
orders otherwise.
68-69,
Sections 5.1.13
113-118
and 5.1.16
Westpac Capital
Notes Terms clauses
4, 5, 6 and 7
PROSPECTUS
For personal use only
Topic
Summary
Further information Pages
2.8.4 What
happens if
Conversion
does not occur
following a
Capital Trigger
Event or NonViability Trigger
Event?
If following a Capital Trigger Event or Non-Viability
Trigger Event, for any reason Conversion of Notes
is not possible (for example due to applicable laws,
order of a court or action of any government authority)
and Westpac is not able to issue the Ordinary Shares
within 5 Business Days then the Holder’s rights
(including to Distributions) in relation to those Notes
are immediately and irrevocably terminated. Your
investment will lose all of its value and you will not
receive any compensation.
Section 5.1.9
Westpac Capital
Notes Terms clause
5.6
67,
116
2.9Ranking and voting rights of the Westpac Capital Notes
Topic
Summary
Further information Pages
2.9.1 Where do
the Westpac
Capital
Notes rank in
a Winding Up?
In the unlikely event of a Winding Up and assuming
the Notes are still on issue and have not been
Converted or otherwise had their rights terminated
following a Capital Trigger Event or Non-Viability
Trigger Event, the right of Holders to receive a return
of capital will rank ahead of Ordinary Shares, equally
among themselves and with Equal Ranking Capital
Securities, but subordinated to Senior Creditors.
It is likely that a Capital Trigger Event or Non-Viability
Trigger Event would occur prior to a Winding Up,
requiring the Conversion of Notes. If Conversion has
occurred, Holders will hold Ordinary Shares and rank
equally with other holders of Ordinary Shares.
If for any reason Conversion of Notes following a
Capital Trigger Event or Non-Viability Trigger Event
is not possible (for example due to applicable laws,
order of a court or action of any government authority)
and Westpac is not able to issue the Ordinary
Shares within 5 Business Days following a Capital
Trigger Event or Non-Viability Trigger Event, then the
Holder’s rights (including to Distributions) in relation
to those Notes are immediately and irrevocably
terminated.
For the potential effect on the assets of Westpac
available to meet the claims of a Holder in a Winding
Up where Westpac is replaced by an Approved
Successor as the ultimate holding company of the
Westpac Group, see Section 5.1.22.
Sections 5.1.2,
5.1.9 and 5.1.22
Westpac Capital
Notes Terms
clauses 2, 5.6 and
12.4
SECTION 2 Information about Westpac Capital Notes
64, 67,
70-71,
111, 116,
125-126
41
For personal use only
Information about
Westpac Capital Notes
42
Topic
Summary
Further information Pages
2.9.2 Are
Westpac
Capital Notes
protected
accounts
or deposit
liabilities?
No. The Notes are not deposit liabilities or protected
accounts of Westpac for the purposes of the
Banking Act or Financial Claims Scheme and are
not subject to the depositor protection provisions of
Australian banking legislation (including the Australian
Government guarantee of certain bank deposits).
Section 5.1.1
Westpac Capital
Notes Terms
clause 13.1
64,
126
2.9.3 Is
Westpac
restricted in
relation to
other securities
it may issue?
No. Westpac may issue other securities, including
further Notes, or other Capital Securities that rank
equally with, ahead of or behind the Notes whether
in respect of distributions, dividends, return of capital
or principal in a Winding Up of Westpac or otherwise,
without the approval of Holders.
Section 5.1.21
Westpac Capital
Notes Terms
clause 13.2
70,
127
2.9.4 Do the
Westpac
Capital Notes
have any
participation
rights?
No. The Notes do not carry a right for Holders to
participate in new issues of Westpac securities.
Westpac Capital
Notes Terms
clause 13.7
127
2.9.5 Do you
have voting
rights?
No. Holders have no right to vote at any general
meeting of Westpac before Conversion.
Holders have certain voting rights which can be
exercised at a meeting of Holders, as set out in the
Notes Deed Poll.
Following Conversion, Holders will become holders of
Ordinary Shares and have the voting rights that attach
to Ordinary Shares.
Sections 2.13.1 and
7.2
Westpac Capital
Notes Terms
clause 13.7
PROSPECTUS
47,
88-89,
127
For personal use only
Topic
Summary
Further information Pages
2.9.6 Can
the Westpac
Capital Notes
Terms be
amended?
No amendment to the Westpac Capital Notes Terms
is permitted without APRA’s prior written approval if
such amendment would impact, or potentially impact,
the classification of the Notes as Additional Tier 1
Capital on a Level 1 or Level 2 basis.
Subject to complying with all applicable laws and
with APRA’s prior written approval (as applicable),
Westpac may amend the Westpac Capital Notes
Terms without the consent of Holders provided
Westpac is of the opinion that the amendment is:
• of a formal, minor or technical nature; or
• made to cure any ambiguity or correct any
manifest error; or
• expedient for the purpose of enabling the Notes
to be listed for quotation or to retain listing on
any stock exchange, or to be offered for, or
subscription for, sale, and it is otherwise not
considered by Westpac to be materially prejudicial
to the interests of Holders as a whole; or
• necessary to comply with the provisions of any
laws or statutory authority or the ASX Listing
Rules; or
• in any case, not materially prejudicial to the
interests of Holders as a whole.
Section 5.1.23
Westpac Capital
Notes Terms
clause 12
71,
124-126
Westpac may also amend the Westpac Capital
Notes Terms (with APRA’s prior written approval as
applicable):
• if the amendment has been approved by a Special
Resolution of Holders; or
• to effect the substitution of an Approved
Successor as the debtor in respect of the Notes
and the issuer of ordinary shares on Conversion,
in accordance with clause 12.4 of the Westpac
Capital Notes Terms.
SECTION 2 Information about Westpac Capital Notes
43
For personal use only
Information about
Westpac Capital Notes
2.10 Comparison of the Westpac Capital Notes with certain
other Westpac Tier 1 Capital securities
Topic
Summary
Further information Pages
2.10.1 What are
the differences
between
Westpac CPS,
Westpac SPS,
Westpac SPS
II, Westpac
TPS and the
Westpac
Capital Notes?
Westpac CPS, Westpac SPS, Westpac SPS II,
Westpac TPS and the Westpac Capital Notes do
have similarities in that they are all securities that
qualify or are treated as Additional Tier 1 Capital
of Westpac under APRA’s current capital adequacy
standards.
However, the securities differ considerably in several
key respects. The table below provides a comparison
of the key terms of Westpac CPS, Westpac SPS,
Westpac SPS II, Westpac TPS and Westpac Capital
Notes, but is not exhaustive.
Section 4.2.3
Westpac Capital
Notes Terms
59,
110-135
Westpac
Capital Notes
Westpac
CPS
Westpac
SPS II
Westpac
SPS
Westpac
TPS
ASX code
WBCPD1
WBCPC
WBCPB
WBCPA
WCTPA
Legal form
Note
Preference share
Stapled security
– one preference
share and one
note issued
by Westpac
Stapled security
– one preference
share and one
note issued
by Westpac
Preferred unit
in the Westpac
TPS Trust
Distributions
Floating rate
Distributions –
payable quarterly
in arrear subject
to the Distribution
Payment
Conditions
Floating rate
dividends
– payable
semi‑annually
in arrear subject
to a dividend
payment test
Floating rate
distributions –
payable quarterly
in arrear subject
to a distribution
payment test
Floating rate
distributions –
payable quarterly
in arrear subject
to a distribution
payment test
Floating rate
distributions –
payable quarterly
in arrear subject
to a distribution
payment test
Expected
to be fully
franked
Yes
Yes
Yes
Yes
Yes
Distribution
Rate
(Margin + 90 day
Bank Bill Rate)
× (1 – Tax Rate)
(Margin + 180 day
bank bill rate)
× (1 – tax rate)
(Margin + 90 day
bank bill rate)
× (1 – tax rate)
(Margin + 90 day
bank bill rate)
× (1 – tax rate)
(Margin + 90 day
bank bill rate)
× (1 – tax rate)
Margin/Step up
• Margin of 3.20%
per annum
• Margin of 3.25%
per annum
• Margin of 3.80%
per annum
• Margin of 2.40%
per annum
• There is no step
up in the Margin
• There is no step
up in the margin
• There is no step
up in the margin
• There is no step
up in the margin
• Margin of 1.00%
per annum until
the step up date
(30 June 2016)
Note:
1. Westpac has applied to have Westpac Capital Notes quoted on ASX and they are expected to trade under the code WBCPD.
44
PROSPECTUS
• After 30 June
2016, the
initial margin
increases by a
one time step
up of 1.00% per
annum
For personal use only
Westpac
Capital Notes
Westpac
CPS
Westpac
SPS II
Westpac
SPS
Westpac
TPS
Issuer
redemption
rights (subject
to APRA
approval)
Yes, on 8 March
2019 and in
certain specified
circumstances
– see Section
2.6.1
Yes, on 31 March
2018 and each
dividend payment
date thereafter,
and in certain
specified
circumstances
Yes, in certain
specified
circumstances
Yes, in certain
specified
circumstances
Yes, on the step
up date and in
certain specified
circumstances
Potential
Conversion
to Ordinary
Shares
(other than
on a Capital
Trigger
Event or
Non‑Viability
Trigger Event)
Scheduled
Conversion on
8 March 2021
(subject to the
satisfaction of
the Scheduled
Conversion
Conditions) or
in other specified
circumstances
Scheduled
conversion on
31 March 2020
(subject to the
satisfaction of
the conversion
conditions) or in
other specified
circumstances
Mandatory
conversion on
30 September
2014 (subject
to the satisfaction
of the conversion
conditions) or in
other specified
circumstances
Mandatory
conversion on
26 September
2013 (subject
to the satisfaction
of the conversion
conditions) or in
other specified
circumstances
Yes, on the step
up date and in
certain specified
circumstances
Conversion
to Ordinary
Shares on a
Capital Trigger
Event or
Non-Viability
Trigger Event
Conversion upon
the occurrence of
a Capital Trigger
Event or NonViability Trigger
Event, not subject
to the satisfaction
of Scheduled
Conversion
Conditions and
with the number
of Ordinary
Shares limited
to the Maximum
Conversion
Number
Conversion upon
the occurrence of
a capital trigger
event only, not
subject to the
satisfaction
of conversion
conditions and
with the number
of shares limited
to the maximum
conversion
number
No
No
No
If a Capital
Trigger Event
or Non‑Viability
Trigger Event
occurs and
Conversion
of Notes is
not possible,
all rights in
relation to those
Notes will be
terminated
SECTION 2 Information about Westpac Capital Notes
45
For personal use only
Information about
Westpac Capital Notes
Ranking in
Winding Up
Westpac
Capital Notes
Westpac
CPS
Westpac
SPS II
Westpac
SPS
Westpac
TPS
If Notes are on
issue at the time,
rank in priority to
Ordinary Shares,
equally with
Equal Ranking
Capital Securities
and behind
Senior Creditors
(including
depositors)
Rank in priority to
Ordinary Shares,
equally with equal
ranking capital
securities and
behind senior
creditors (including
depositors)
Rank in priority to
Ordinary Shares,
equally with
equal ranking
capital securities
and behind
all Westpac
depositors and
all holders of
senior and
subordinated debt
(in accordance
with the terms of
issue of Westpac
SPS II)
Rank in priority to
Ordinary Shares,
equally with
equal ranking
capital securities
and behind
all Westpac
depositors and
all holders of
senior and
subordinated debt
(in accordance
with the terms of
issue of Westpac
SPS)
Rank equally
with equal ranking
preference shares
as Westpac
TPS will have
exchanged into
preference shares
of Westpac but
ahead of Ordinary
Shares and behind
all Westpac
depositors and
all holders of
senior and
subordinated debt
(in accordance with
the terms of issue
of Westpac TPS)
If Notes have
been Converted
into Ordinary
Shares, Holders
will become
holders of
Ordinary Shares
and will rank
equally with
other holders of
Ordinary Shares
2.11Payment for Westpac Capital Notes
Topic
Summary
Further information Pages
2.11.1 What
will you be
required
to pay?
The Face Value of each Note is $100. The minimum
number of Notes that you can apply for is 50 Notes,
requiring a minimum Application Payment of
$5,000. Applications for greater than the minimum
Application amount must be in multiples of 10 Notes
– that is $1,000.
Section 3.1
49
2.11.2 Is
brokerage or
stamp duty
payable?
No brokerage or stamp duty is payable to Westpac on
your Application. You may have to pay brokerage on
any subsequent trading of your Notes on ASX after
the Notes have been quoted on ASX.
Section 3.5
52
2.11.3 Will you
be required
to pay any
ongoing fees
or other costs?
No. You will generally not be required to pay any
ongoing fees or other costs following the issue of
the Notes. The costs of carrying out the Offer and
maintaining an ASX listing for the Notes will be paid
by Westpac.
Sections 7.4.2
and 8.4
90, 95
2.12 No set off against other amounts owed
46
Topic
Summary
Further information Pages
2.12.1 No set
off
Neither Westpac nor any Holder is entitled to set off
any amounts due in respect of the Notes against any
amount of any nature owed by Westpac to the Holder
or by the Holder to Westpac (as applicable).
Westpac Capital
Notes Terms
clause 13.3
PROSPECTUS
127
For personal use only
2.13 Notes Deed Poll
Topic
Summary
Further information Pages
2.13.1 Has a
trustee been
appointed
for Westpac
Capital Notes?
No, a trustee has not been appointed for the Notes.
Instead, there is a Notes Deed Poll made by Westpac
in favour of each person who is from time to time
a Holder.
The Notes Deed Poll contains:
• Westpac’s agreement to observe its obligations
as set out in the Westpac Capital Notes Terms;
• an obligation to appoint the Registry and procure
the Registry to establish and maintain a Westpac
Capital Notes Register; and
• provisions for meetings of Holders.
See the Notes Deed
Poll, available at
Westpac’s website at
www.westpac.com.
au/investorcentre
N/A
Holders will be bound by the terms of the Notes
Deed Poll, the Westpac Capital Notes Terms and this
Prospectus when Notes are Allotted or transferred to
them or they purchase Notes.
The Registry holds the original executed Notes Deed
Poll on behalf of Holders. Each Holder can enforce
Westpac’s obligations under the Notes Deed Poll
and the Westpac Capital Notes Terms independently
of the Registry and each other Holder.
A copy of the Notes Deed Poll can be obtained
from Westpac’s website at www.westpac.com.au/
investorcentre and is incorporated by reference into
this Prospectus.
2.14Additional information
Topic
Summary
Further information Pages
2.14.1 How
can you find
out more
information
about the
Offer?
A number of relevant documents are available
free of charge from Westpac during the Offer
Period. If, after reading this Prospectus, you
have any questions, then you should contact
your financial adviser or other professional adviser
or call the Westpac Capital Notes Information Line
(Monday to Friday, 8.30am to 5.30pm, Sydney
time) on 1300 133 814.
Section 8.2.2
SECTION 2 Information about Westpac Capital Notes
93
47
For personal use only
3
Application
information
This Section sets out what you must do if you
wish to apply for Westpac Capital Notes.
For personal use only
This Section sets out:
3.1 Applying for Westpac Capital Notes
3.2 Who may apply
3.3 Obtaining a Prospectus and an Application Form
3.4 Application Payments
3.5 Brokerage and stamp duty
3.6 Refunds and interest
3.7 Allocation and Allotment
3.8 ASX quotation, trading and Holding Statements
3.9 New holder information
3.10 Enquiries
3.1 Applying for Westpac
Capital Notes
Applications for Notes must be made using the
Application Form attached to, or accompanying,
this Prospectus. Eligible Securityholders may also
apply online by visiting the Westpac website at
www.westpac.com.au/investorcentre and following
the instructions. An Application Form and Application
Payment for Notes must be completed and returned,
or an online Application submitted, in accordance with
the instructions set out below and in sufficient time to
be received by the Closing Date for the relevant Offer.
The instructions for lodging your Application Form
vary depending on which Offer you apply under.
Westpac and the Joint Lead Managers may, in their
absolute discretion, close the Offer early or extend
the Offer Period without notice. Westpac may also
withdraw the Offer at any time before Notes are
issued. Accordingly, if you wish to apply for Notes you
are encouraged to do so as soon as possible after the
Opening Date.
There is no minimum amount to be raised by the
Offer and Westpac reserves the right to accept or not
to accept Applications from any Applicant.
No action has been taken to register or qualify Notes
or otherwise permit a public offer of the Notes in any
jurisdiction outside Australia where such an offer is
made under the laws in that jurisdiction.
Applications must be for a minimum of 50 Notes
($5,000). If your Application is for more than 50
Notes, then you must apply in incremental multiples
of 10 Notes ($1,000).
The Offer is for the issue of Notes to raise
approximately $1.25 billion, with the ability to raise
more or less.
The Offer consists of:
• a Securityholder Offer, made to Eligible
Securityholders;
• a Broker Firm Offer, made to Broker Firm
Applicants; and
• an Institutional Offer, made to Institutional
Investors invited by Westpac Institutional Bank to
bid for Notes under the Bookbuild.
There is no general public offer of the Notes.
However, Westpac reserves the right to accept
Applications from persons other than Eligible
Securityholders, Broker Firm Applicants
and Institutional Investors at its discretion.
SECTION 3 APPLICATION INFORMATION
49
For personal use only
APPLICATION
INFORMATION
3.2 Who may apply
Type of Offer
Who is eligible to
participate?
What to do to apply
Securityholder
Offer
You are eligible to
participate in the
Securityholder Offer
if you are an Eligible
Securityholder.
If you are an Eligible Securityholder, your completed
Securityholder Application Form (or online
Application) and Application Payment must be
received by the Registry before the Closing Date
for the Securityholder Offer, which is expected to be
5.00pm (Sydney time) on 1 March 2013.
You are an Eligible
Securityholder if you
were a registered holder
of Ordinary Shares,
Westpac TPS, Westpac
SPS, Westpac SPS II,
Westpac CPS and/or
Westpac Subordinated
Notes 2012 at 7.00pm
(Sydney time) on
21 January 2013 and
shown on the Register
as having an address
in Australia.
You should either:
• complete and return a paper based personalised
Securityholder Application Form and Application
Payment to the Registry; or
• apply online by visiting the Westpac website
at www.westpac.com.au/investorcentre and
following the instructions. You will need your
SRN/HIN, which you can find on the top right
hand corner of the postcard mailed to you.
Online Application Payments may only be made
using bpay®1.
Westpac and the Joint
Lead Managers reserve
the right to scale back
Applications from Eligible
Securityholders and to treat
Applications in excess of
$250,000 as part of the
Institutional Offer. For the
Allocation policy in relation
to the Securityholder Offer
– see Section 3.7.1.
Paper based Securityholder Application Forms together with Application Payments
can be returned to the Registry by:
Mail
Westpac Capital Notes Offer
Link Market Services Limited
Reply Paid 3560
Sydney NSW 2001
Or
Hand delivery
Westpac Capital Notes Offer
Link Market Services Limited
1A Homebush Bay Drive
Rhodes NSW 2138
Securityholder Application Forms and Application Payments will not be accepted
at any other address (including Westpac’s registered office or any other Westpac
office or branch).
Note:
1. Registered to BPAY Pty Limited (ABN 69 079 137 518)
50
PROSPECTUS
For personal use only
Type of Offer
Who is eligible to
participate?
What to do to apply
Broker Firm
Offer
You are eligible to
participate in the Broker
Firm Offer if you are
an Australian resident
retail client of a Syndicate
Broker who applies for a
broker firm Allocation from
a Syndicate Broker under
the Broker Firm Offer.
If you are a Broker Firm Applicant, your Broker
Firm Application Form must be received by your
Syndicate Broker in time for them to process your
Application on your behalf by the Closing Date for the
Broker Firm Offer, which is expected to be 10.00am
(Sydney time) on 7 March 2013.
Institutional
Offer
You are eligible to
participate in the
Institutional Offer if you are
an Institutional Investor.
3.3Obtaining a Prospectus
and an Application Form
A copy of this Prospectus may be:
• downloaded from the Westpac website
at www.westpac.com.au/investorcentre; or
• if you are an Eligible Securityholder, sent to
you during the Offer Period with a personalised
Securityholder Application Form if you register
online to receive a Prospectus on the website
above; or
• if you are an Eligible Securityholder, sent to
you during the Offer Period with a personalised
Securityholder Application Form if you call the
Westpac Capital Notes Information Line
(Monday to Friday 8.30am to 5.30pm, Sydney
time) on 1300 133 814; or
• if you are a Broker Firm Applicant, obtained from
your Syndicate Broker during the Offer Period with
a Broker Firm Application Form by contacting your
Syndicate Broker.
Please contact your Syndicate Broker for their
instructions on how to submit your Broker Firm
Application Form.
If you are an Institutional Investor, you must apply to
participate by contacting Westpac Institutional Bank.
3.4 Application Payments
3.4.1Eligible Securityholders
Eligible Securityholders applying on a paper based
personalised Securityholder Application Form
Application Payments can only be made by cheque(s)
in Australian dollars drawn on an Australian branch of
a financial institution and made payable to “Westpac
Capital Notes Offer”. Cheque(s) should be crossed
“not negotiable”. Cash payments or bank cheques will
not be accepted.
Eligible Securityholders applying online
Visit the Westpac website at www.westpac.com.au/
investorcentre and follow the instructions to apply
online. Online Application Payments may only be
made using Bpay®.
3.4.2 Broker Firm Applicants
If you are a Broker Firm Applicant, then you should
make your Application Payment under arrangements
between you and your Syndicate Broker.
SECTION 3 APPLICATION INFORMATION
51
For personal use only
APPLICATION
INFORMATION
3.5 Brokerage and stamp
duty
No brokerage or stamp duty is payable to Westpac on
your Application. You may have to pay brokerage on
any later sale of your Notes on ASX after Notes have
been quoted on ASX.
3.6Refunds and interest
All Application Payments received by the Registry
before the Notes are issued will be held by Westpac
in a bank account established solely for the purpose
of depositing Application Payments received. Any
interest that accrues on the Application Payments
will be retained by Westpac.
If you are not Allotted any Notes or you are Allotted
fewer Notes than the number that you applied
for as a result of a scaleback, all or some of your
Application Payment (as applicable) will be returned
to you (without interest) as soon as possible after the
Issue Date.
In addition, if the Offer does not proceed for
any reason, Applicants will have their Application
Payments refunded to them (without interest)
as soon as possible.
3.7Allocation
and Allotment
Westpac reserves the right not to accept Applications
from any Applicant and Westpac and the Joint Lead
Managers reserve the right to Allocate any Eligible
Securityholder a lesser number of Notes than applied
for, including less than the minimum Application of
50 Notes ($5,000).
52
Westpac also reserves the right to not issue any
Notes. In this instance no Applicants will receive
an Allocation.
3.7.2Allotment
Westpac intends to issue and Allot approximately
12.5 million Notes at a Face Value of $100 each,
to raise approximately $1.25 billion with the ability
to raise more or less.
Westpac will not Allot any Notes until it has been
granted approval for the Notes to be quoted on ASX
and all proceeds from accepted Applications have
been received by Westpac. Subject to approval for
quotation being granted, Westpac intends to Allot the
Notes on 8 March 2013. Westpac and the Joint Lead
Managers may, in their absolute discretion, close the
Offer early or extend the Offer Period without notice.
Westpac may also withdraw the Offer at any time
before Notes are issued.
3.8 ASX quotation, trading
and Holding Statements
3.7.1Allocation
The Allocation policy for Eligible Securityholders
will be determined by Westpac in consultation
with the Joint Lead Managers at the close of the
Securityholder Offer. This Allocation policy and any
scaleback will be announced on ASX on the day
Notes commence trading on a deferred settlement
basis, which is expected to be 12 March 2013.
The Allocation policy for Syndicate Brokers and
Institutional Investors was determined under the
Bookbuild – see Section 7.4. Westpac and the Joint
Lead Managers have the right to nominate the
persons to whom Notes will be Allocated, including
in respect of firm Allocations to Syndicate Brokers
and Institutional Investors under the Bookbuild.
3.8.1 ASX quotation
Westpac has applied to ASX for the Notes to be
quoted on ASX. Quotation is not guaranteed. If ASX
does not grant permission for the Notes to be quoted,
then the Notes will not be issued and Application
Payments will be refunded (without interest) as soon
as possible.
It is expected that the Notes will be quoted under
ASX code WBCPD.
PROSPECTUS
For personal use only
3.8.2Trading
3.9 New holder information
It is expected that the Notes will begin trading on ASX
on a deferred settlement basis on 12 March 2013.
Trading of the Notes on a deferred settlement basis
is expected to continue until the dispatch of Holding
Statements is completed, which is expected to occur
on or by 15 March 2013. It is expected that trading of
the Notes will begin on a normal settlement basis
on 18 March 2013.
Applicants issued with Notes under the Offer will
be sent a new investor pack shortly after the Issue
Date. In addition to a Holding Statement, this pack
will contain important information relating to how
Distributions and other amounts will be paid on
the Notes.
You are responsible for confirming your
Allocation before trading Notes to avoid the risk of
selling Notes you do not own. If you sell your Notes
before you receive confirmation of your Allocation,
you do so at your own risk.
To assist you in determining your Allocation prior
to receipt of your Holding Statement, Westpac
will announce the basis of Allocation by placing
advertisements in major national and metropolitan
newspapers in Australia on or before 12 March 2013.
If you are a Broker Firm Applicant you should contact
your Syndicate Broker to find out your Allocation prior
to receiving your Holding Statement. If you have
applied under the Securityholder Offer you should
call the Westpac Capital Notes Information Line
(Monday to Friday, 8.30am to 5.30pm, Sydney
time) on 1300 133 814.
3.8.3Holding Statements
Westpac expects Holding Statements will be
dispatched to successful Applicants on or by
15 March 2013. Westpac will apply for the Notes
to participate in CHESS. Westpac does not intend
to quote the Notes on any securities exchange apart
from ASX. No certificates will be issued for the Notes.
3.9.1Provision of bank account details for
Distributions and other payments
Westpac will only pay Distributions directly into an
Australian dollar account of a financial institution
nominated by you at any time before close of
business on the Record Date in respect of that
payment. Westpac will not pay Distributions on the
Notes by cheque.
As part of the new investor pack, the Registry will
send to each Holder an Account Nomination Form
either requesting your account details or confirming
that your preference is to use existing dividend or
distribution account details, if applicable, for the direct
crediting of payments of Distributions, repayment
of principal and payments of other amounts. You must
complete and return this Account Nomination Form as
soon as possible.
If you have not notified Westpac of an appropriate
account by the close of business on the Record Date,
or the credit of any money to your account does not
complete for any reason, then Westpac will send a
notice to the postal address or email address most
recently notified by you advising of the uncompleted
payment. In that case, the amount of the uncompleted
payment will be held as a deposit in a non-interest
bearing account until the first to occur of the following:
• you nominate a suitable Australian dollar account
maintained in Australia with a financial institution
to which the payment may be credited; or
• Westpac is entitled or obliged to deal with
the amount in accordance with the law relating
to unclaimed moneys.
No interest is payable in respect of any delay
in payment.
SECTION 3 APPLICATION INFORMATION
53
For personal use only
APPLICATION
INFORMATION
3.9.2Provision of Tax File Number
or Australian Business Number
The Registry will provide you with a form so that you
may provide your Tax File Number (“TFN”), Australian
Business Number (“ABN”) or both.
You do not have to provide your TFN or ABN.
However, Westpac may be required to withhold
Australian tax at the maximum marginal tax rate
including the Medicare Levy (currently 46.5%) on the
amount of any Distribution that is not 100% franked,
unless you provide one of the following:
• TFN; or
• TFN exemption code (if applicable); or
• ABN if Notes are held in the course of an
enterprise carried on by you.
You should also read the Taxation Letter from Allens
in Section 6.
3.10Enquiries
If you have any questions on how to apply
for Westpac Capital Notes, you should contact
the Westpac Capital Notes Information Line
(Monday to Friday, 8.30am to 5.30pm, Sydney
time) on 1300 133 814.
If you are unclear in relation to any matter or are
uncertain if the Notes are a suitable investment
for you, you should consult your financial adviser
or other professional adviser.
If you are a Broker Firm Applicant and you
are in any doubt about what action you should
take, you should contact your Syndicate Broker.
54
PROSPECTUS
For personal use only
4
ABOUT
WESTPAC
This Section sets out information about Westpac.
For personal use only
ABOUT
WESTPAC
4.1.2Organisational structure
This Section sets out:
4.1 Overview of Westpac’s business including
summary financial information
4.2 Capital management strategy and capital ratios
4.3 Funding and liquidity
Australian Financial Services (“AFS”) is responsible
for the Westpac Group’s Australian retail banking,
business banking and wealth operations. AFS also
includes the product and risk responsibilities for
Australian Banking. It incorporates the operations
of Westpac Retail & Business Banking, St.George
Banking Group and BT Financial Group (Australia)
as follows:
4.1Overview of Westpac’s
business including
summary financial
information
4.1.1Overview of Westpac’s business
Westpac is one of the four major banking organisations
in Australia and one of the largest banking
organisations in New Zealand. The Westpac Group
provides a broad range of banking and financial
services in these markets, including retail, business and
institutional banking and wealth management services.
Westpac has branches, affiliates and controlled
entities throughout Australia, New Zealand and the
Pacific region and maintains branches and offices
in some of the key financial centres around the world.
As at 30 September 2012, Westpac had total
assets of $675 billion. Westpac’s Ordinary Shares
and certain other securities are quoted on ASX
and, as at 5 February 2013, Westpac’s market
capitalisation was approximately $86.7 billion.
The performance of Ordinary Shares during the
period from February 2003 to February 2013 is set
out in the graph below.
The Westpac Group’s operations comprise the following
key customer-facing business divisions operating under
multiple brands, serving around 12 million customers.
• Westpac Retail & Business Banking (“Westpac
RBB”) is responsible for sales and service for
Westpac’s consumer, small to medium enterprise
customers and commercial customers (typically
with turnover of up to $100 million) in Australia
under the Westpac brand. Activities are conducted
through Westpac RBB’s network of branches
and business banking centres and specialised
consumer and business relationship managers,
with the support of cash flow, financial markets
and wealth specialists, customer service centres,
ATMs and internet channels;
• St.George Banking Group (“St.George”) is
responsible for sales and service for St.George’s
consumer, business and corporate customers in
Australia under the St.George, BankSA, Bank of
Melbourne and RAMS brands. RAMS is a financial
services group specialising in mortgages and
online deposits.
Westpac
Shares daily
daily closing
closing price
price1
Westpac Ordinary
Ordinary Shares
$35
$30
$25
$20
$15
$10
$5
$0
Feb-2003
Feb-2005
Feb-2007
Feb-2009
Past performance is not necessarily an indicator of future performance.
Note:
1. Source: IRESS
56
PROSPECTUS
Feb-2011
Feb-2013
For personal use only
Consumer activities are conducted through a
network of branches, third party distributors, call
centres, ATMs, EFTPOS terminals and internet
banking services. Business and corporate
customers (businesses with facilities typically up
to $150 million) are provided with a wide range
of banking and financial products and services
including specialist advice for cash flow finance,
trade finance, automotive and equipment finance,
property finance, transaction banking and
treasury services. Sales and service activities for
business and corporate customers are conducted
by relationship managers via business banking
centres, internet and customer service centre
channels; and
• BT Financial Group (Australia) (“BTFG”) is
Westpac’s Australian wealth management division.
BTFG’s funds management operations include
the manufacturing and distribution of investment,
superannuation and retirement products, investment
platforms such as Wrap and master trusts and
private banking and financial planning. BTFG’s
insurance solutions cover the manufacturing and
distribution of life, general and lenders mortgage
insurance. BTFG’s brands include Advance Asset
Management, Ascalon, Asgard, BT, BT Investment
Management (64.5% owned by the Westpac Group
and consolidated in BTFG’s Funds Management
business), BT Select, Licensee Select, Magnitude,
Securitor, and the advice, private banking and
insurance operations of Bank of Melbourne,
BankSA, St.George and Westpac.
Westpac Institutional Bank (“WIB”) delivers a
broad range of financial services to commercial,
corporate, institutional and government customers
with connections to Australia and New Zealand. WIB
operates through dedicated industry relationship
and specialist product teams, with expert knowledge
in transactional banking, financial and debt capital
markets, specialised capital and alternative investment
solutions. Customers are supported through branches
and subsidiaries located in Australia, New Zealand,
the United States, United Kingdom and Asia.
Westpac New Zealand is responsible for sales and
service of banking, wealth and insurance products
for consumers, business and institutional customers
in New Zealand. Westpac conducts its New Zealand
banking business through two banks in New Zealand:
Westpac New Zealand Limited, which is incorporated
in New Zealand and Westpac Banking Corporation
(NZ Division), which is incorporated in Australia.
Westpac New Zealand operates via an extensive
network of branches and ATMs across both the
North and South Islands. Business and institutional
customers are also served through relationship
and specialist product teams. Banking products are
provided under the Westpac and WIB brands while
insurance and wealth products are provided under
Westpac Life and BT brands, respectively.
Other business divisions include:
• Pacific Banking, which provides banking services
for retail and business customers in seven Pacific
Island Nations;
• Group Services, encompassing technology,
banking operations, legal and property services;
• Treasury, which is primarily focused on the
management of the Group’s interest rate risk and
funding requirements; and
• Core Support, which comprises those functions
performed centrally, including finance, risk and
human resources.
4.1.3Overview of Westpac’s results for
the year ended 30 September 20121
Westpac’s statutory net profit after tax for the year
ended 30 September 2012 was $5,970 million, a
decrease of 15% compared to $6,991 million for the
year ended 30 September 2011. Cash earnings2 for
the year ended 30 September 2012 were $6,598
million, an increase of 5% compared to $6,301 million
for the year ended 30 September 2011.
To calculate cash earnings, Westpac adjusts net
profit attributable to owners of Westpac for certain
items. Management believes this allows the Westpac
Group to more effectively assess performance for the
Notes:
1. Unless otherwise specified, the following financial information and discussion has been extracted from Westpac’s 2012 Annual Report, including the statutory audited
financial statements for the period ending 30 September 2012.
2. Cash earnings is calculated by adjusting statutory audited results for (i) material items that do not reflect ongoing operations; (ii) items that are not considered when dividends
are recommended; and (iii) accounting reclassifications between individual line items that do not impact statutory results. For a detailed reconciliation of cash earnings to
statutory audited results, refer to page 5 of Westpac’s 2012 Full Year Results. Westpac’s 2012 Full Year Results are available on the Westpac website at
www.westpac.com.au/investorcentre.
SECTION 4 ABOUT WESTPAC
57
For personal use only
ABOUT
WESTPAC
current period against prior periods and to compare
performance across business divisions and across
peer companies.
Statutory earnings per Ordinary Share decreased
16% to 195.8 cents per Ordinary Share for the year
ended 30 September 2012, compared to 233.0 cents
per Ordinary Share for the year ended 30 September
2011. Cash earnings per Ordinary Share increased 3%
to 215.9 cents per Ordinary Share for the year ended
30 September 2012, compared to 209.3 cents per
Ordinary Share for the year ended 30 September 2011.
Westpac declared a fully franked final dividend of
84 cents per Ordinary Share for the year ended
30 September 2012. Total dividends for the year ended
30 September 2012 were 166 cents, an increase of
6% compared to the year ended 30 September 2011.
Total dividends for the year ended 30 September 2012
represent a dividend payout ratio of 84.8% of statutory
earnings or 77.2% of cash earnings.
Further financial and other information for Westpac
can be obtained from Westpac’s 2012 Annual Report,
Westpac’s 2012 Full Year Results and the Westpac
Capital Notes Offer Investor Presentation (issued
on the date of the Original Prospectus) which are
available on the Westpac website at www.westpac.
com.au/investorcentre.
4.2 Capital management
strategy and capital
ratios
4.2.1 Capital adequacy
APRA is the prudential regulator of the Australian
financial services industry. It oversees credit unions,
building societies, general insurance and reinsurance
companies, life insurance, friendly societies, most
members of the superannuation industry, and banks
such as Westpac.
For the year ended 30 September 2012, net
interest income was $12,502 million, an increase
of $506 million or 4% compared to the year ended
30 September 2011, and non-interest income was
$5,481 million, an increase of $564 million or 11%
compared to the year ended 30 September 2011.
For the year ended 30 September 2012, operating
expenses were $7,909 million, an increase of
$503 million or 7% compared to the year ended
30 September 2011. On a cash earnings basis,
operating expenses were $7,379 million, an increase
of $273 million or 4% compared to the year ended
30 September 2011. The expense to income
ratio for the year ended 30 September 2012 was
44.0% compared with 43.8% for the year ended
30 September 2011. On a cash earnings basis,
the expense to income ratio for the year ended
30 September 2012 was 40.8% compared with
41.5% for the year ended 30 September 2011.
For the year ended 30 September 2012, impairment
charges on loans were $1,212 million, an increase
of $219 million or 22% compared to the year ended
30 September 2011.
58
The effective tax rate for the year ended
30 September 2012 was 31.9% compared to 17.1%
for the year ended 30 September 2011. On a cash
earnings basis, the effective tax rate for the year
ended 30 September 2012 was 29.7% compared to
29.4% for the year ended 30 September 2011.
Australia’s risk-based capital adequacy guidelines are
generally consistent with the International Regulatory
Framework for Banks, also known as Basel III, issued
by the BCBS, except where APRA has exercised
certain discretions. On balance, the application of these
discretions acts to reduce reported capital ratios relative
to those reported in other jurisdictions. Under Basel III,
APRA requires Australian banks (including Westpac)
to maintain a minimum ratio of capital to risk-adjusted
assets which consists of at least 4.5% Common Equity
Tier 1 Capital, 6% Tier 1 Capital and 8% Total Capital.
APRA also requires ADIs, including Westpac to
maintain minimum prudential capital ratios which may
not be disclosed.
Westpac’s approach to capital management seeks
to balance the fact that capital is an expensive form
of funding with the need to be adequately capitalised
PROSPECTUS
For personal use only
as an ADI and to ensure Westpac complies with
APRA’s minimum capital adequacy requirements.
4.2.2Regulatory change
On 16 December 2010, the BCBS released the
final text of the Basel III capital framework. The
framework was revised in June 2011 and incorporates
higher global minimum capital requirements and
the introduction of two new capital buffers. The
framework includes:
• an increase in the minimum common equity
requirement from 2.0% to 4.5%;
• an increase in the minimum Tier 1 Capital
requirement from 4.0% to 6.0%;
• a capital conservation buffer at 2.5%, to be
met with common equity; and
• a countercyclical buffer of between 0% to 2.5%
to be met with common equity or other fully
loss absorbing capital (subject to further BCBS
guidance). The buffer is intended to be applied
during times of excess credit growth.
The framework includes a compliance timetable, with
phase-in arrangements starting from 1 January 2013
and some elements not becoming fully effective until
1 January 2019.
On 28 September 2012, APRA released the four final
revised capital adequacy standards that will govern
the implementation of the Basel III capital framework
in Australia. On 13 November 2012, APRA released
updated prudential standards which incorporated
the Basel III requirements for counterparty credit
risk. This release represented the final measures
to complete implementation of the Basel III capital
reforms in Australia. APRA is requiring Australian
ADIs to meet the new minimum capital requirements
from 1 January 2013 and has proposed that the
capital conservation buffer apply in full from its
introduction date of 1 January 2016. Westpac
believes it is well placed to meet the new capital
requirements within the timeframes proposed.
In November 2011, the BCBS published Global
systemically important banks: Assessment
methodology and the additional loss absorbency
requirement. This document announced the final
methodology for determining Global Systemically
Important Banks (“G-SIBs”), and the Financial
Stability Board (“FSB”) named 29 G-SIBs that would
be subject to higher capital requirements and greater
oversight. The list of G-SIBs is subject to annual
review and in November 2012 the FSB issued an
updated list of 28 G-SIBs as well as specifying the
higher capital requirements proposed for each. These
increased capital requirements will be phased in from
January 2016. No Australian bank has been named as
a G-SIB based on the current methodology and data.
The G20 also directed the FSB to consider how
to extend the framework to a broader set of SIFIs,
including Domestic Systemically Important Banks
(“D-SIBs”), and to make recommendations to
the G20. On 12 October 2012, the BCBS issued
the paper A framework for dealing with domestic
systemically important banks. The paper sets
out a principles based framework for regulating
D-SIBs. However, until APRA develops the rules for
implementing the framework in Australia, any impact
on Westpac cannot be determined.
APRA’s final Basel III prudential standards also include
a number of changes to the eligibility criteria for capital
instruments, including stricter criteria for instruments
to qualify as Additional Tier 1 Capital. The new
requirements came into effect on 1 January 2013.
4.2.3Prudential capital classification
For regulatory capital purposes, Total Capital is the
sum of Tier 1 Capital and Tier 2 Capital. Tier 1 Capital
is the sum of Common Equity Tier 1 Capital and
Additional Tier 1 Capital. Tier 1 Capital is generally
considered a higher quality capital than Tier 2 Capital.
APRA has confirmed that the Notes will be eligible for
inclusion as Additional Tier 1 Capital under APRA’s
prudential standard APS 111.
4.2.4Impact of the issue of the Westpac
Capital Notes on Westpac’s
consolidated balance sheet
Based on Westpac’s audited consolidated balance
sheet as at 30 September 2012 and assuming an
issue size of $1.25 billion, the issue of the Notes
will increase Westpac’s loan capital by $1.23 billion
($1.25 billion gross proceeds of the Offer, less
$16 million Offer costs) and increase Westpac’s
cash balances by $1.23 billion, with no impact
on Westpac’s net assets or shareholders’ equity.
SECTION 4 ABOUT WESTPAC
59
For personal use only
ABOUT
WESTPAC
Westpac to continue to operate in a sound and viable
manner. Common Equity Tier 1 Capital is the highest
form of regulatory capital.
Total assets and total liabilities will increase
by approximately 0.18% and 0.20% respectively.
Westpac may raise more or less than $1.25 billion
under the Offer and these figures will be impacted
accordingly.
The anticipated proceeds of the Offer will be used
by Westpac for general business purposes. The Offer
will not have a material impact on Westpac’s cash
flow. The anticipated proceeds of the Offer represent
less than 0.20% of Westpac Group’s total liabilities
as at 30 September 2012.
4.2.5 Westpac’s reported and pro-forma
consolidated capital adequacy
position as at 30 September 2012
The following table sets out the pro-forma capital
adequacy position based on Westpac’s audited
consolidated balance sheet as at 30 September 2012,
adjusted as if the issue of $1.25 billion of Notes was
completed as at that date.
4.2.6 Common Equity Tier 1 Capital Ratio
Regulatory capital helps to protect depositors and
other creditors by providing a loss-absorbing capital
buffer which supports losses that may be incurred
by an ADI. The levels of regulatory capital are an
indicator of an ADI’s financial strength. Regulatory
capital supports Westpac’s operations by providing
a buffer to absorb unanticipated losses from its
activities and, in the event of problems, assists
Westpac’s Common Equity Tier 1 Capital Ratio
was 8.38% on a Level 2 basis as at 30 September
2012. On 28 September 2012, APRA released its
final capital adequacy standards governing the
implementation of the Basel III capital framework
in Australia, which commenced on 1 January 2013
– see Section 4.2.2. Under Basel III, Westpac’s
estimated Common Equity Tier 1 Capital Ratio was
8.16% on a Level 2 basis as at 30 September 2012.
Under Basel III, Westpac’s Level 1 and Level 2
Common Equity Tier 1 Capital Ratios are above
APRA’s minimum requirement of 4.5% of risk
weighted assets applicable from 1 January 2013.
Westpac’s Level 1 and Level 2 Common Equity Tier 1
Capital ratios are also above the regulatory minimum
of 7.0% applicable from 1 January 2016, which
includes the capital conservation buffer requirement
of 2.5%. APRA also requires ADIs, including Westpac
to maintain minimum prudential capital ratios which
may not be disclosed. Westpac holds sufficient
Common Equity Tier 1 Capital to meet APRA’s
minimum prudential capital ratios on a Level 1 and
Level 2 basis.
Under APRA’s Basel III requirements, Additional
Tier 1 Capital instruments such as the Westpac
Capital Notes, must include certain loss absorption
requirements such as Conversion of the Westpac
Westpac reported and pro-forma consolidated capital adequacy position (Level 2)
Reported
30 September 2012
Pro-forma
Adjustments
Pro-forma
30 September 2012
Common Equity Tier 1 Capital Ratio – Basel II
8.38%
0.00%
8.38%
Common Equity Tier 1 Capital Ratio – Basel III1
8.16%
0.00%
8.16%
Tier 1 Capital Ratio – Basel II
10.25%
0.41%
10.66%
Tier 2 Capital ratio – Basel II
1.40%
0.00%
1.40%
Total Capital Ratio – Basel II
11.65%
0.41%
12.06%
Note:
1. The Common Equity Tier 1 Capital Ratio under Basel III is estimated as at 30 September 2012.
60
PROSPECTUS
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Capital Notes into Ordinary Shares or the termination
of Holders’ rights when Westpac’s regulatory capital
falls below certain thresholds – see Section 2.5.7 for
a discussion on the Capital Trigger Event. A Capital
Trigger Event may occur if Westpac’s Common
Equity Tier 1 Capital Ratio declines to (or falls below)
5.125%, on either a Level 1 or Level 2 basis, as
defined by APRA. For Westpac, Level 1 broadly
means Westpac and Level 2 broadly means the
regulatory consolidated Westpac Banking Group
including offshore banking subsidiaries (for example
Westpac New Zealand Limited).
As indicated above, under Basel III, Westpac’s
estimated Common Equity Tier 1 Capital Ratio on
a Level 2 basis was 8.16% at 30 September 2012,
considerably above the Capital Trigger Event level
of 5.125% – the difference being equivalent to over
$9.3 billion in surplus Common Equity Tier 1 Capital.
Under Basel III, Westpac has established a preferred
range for its Common Equity Tier 1 Capital Ratio on
a Level 2 basis of 8.0% to 8.5%. This preferred range
is considerably above the Capital Trigger Event level
of 5.125%, and reflects Westpac’s desire to remain
well capitalised. Westpac’s Basel III capital ratios will
vary according to the timing of dividend payments
and Westpac’s preferred range accommodates this
volatility.
On a Level 1 basis Westpac’s Common Equity
Tier 1 Capital Ratio under Basel III at 30 September
2012 was estimated to be 8.15% which was also
considerably above the Capital Trigger Event level
of 5.125%. Differences between Westpac’s Level 1
and Level 2 Common Equity Tier 1 Capital Ratios
relate principally to the level of capital held within
offshore banking subsidiaries. Westpac expects its
Level 1 and Level 2 capital ratios to move in a similar
way over time, based on Westpac’s current capital
management policy for Westpac subsidiaries.
4.3Funding and liquidity
4.3.1Funding
The Westpac Group monitors the composition and
stability of its funding base so it is maintained within
the Westpac Group’s funding liquidity risk appetite.
This includes a target of greater than 75% for the
stable funding ratio. Stable funding includes customer
deposits, wholesale term funding with residual maturity
greater than 12 months, equity and securitisation.
The composition and stability of the Westpac
Group’s funding base strengthened in the 12 months
to 30 September 2012. The stable funding ratio
increased by six percentage points to 83%,
reflecting increased customer deposits and reduced
short-term wholesale funding. Customer deposits
increased by $37.6 billion and comprised 58% of
the Westpac Group’s total funding at 30 September
2012. Long-term wholesale funding comprised
16% of the Westpac Group’s total funding as at
30 September 2012, in line with the position as
at 30 September 2011, and short-term wholesale
funding (including long-term wholesale funding with
less than 12 months to maturity) comprised 17%,
down from 23% as at 30 September 2011.
Maintaining a diverse funding base and ensuring the
Westpac Group has capacity and flexibility to access
a wide range of funding markets, debt investors and
products is an important part of managing liquidity risk.
Westpac also undertakes an annual funding review
that outlines the funding strategy for the coming year.
This review encompasses trends in global markets,
peer analysis, wholesale funding capacity, expected
funding requirements and a funding risk analysis. This
strategy is continuously reviewed to take account of
changing market conditions, investor sentiment and
estimations of asset and liability growth rates.
4.3.2Liquidity
The Westpac Group has a robust liquidity risk
management framework to ensure its ability to meet
cash flow obligations under a wide range of market
conditions, including name-specific and market wide
stress scenarios.
Westpac’s liquidity risk management framework
models its ability to fund under both normal conditions
and during crisis situations, with models run globally
and for specific geographical regions: Australia, New
Zealand and offshore. This approach is designed to
ensure that Westpac’s funding framework is sufficiently
flexible to accommodate a wide range of market
conditions. The liquidity risk management framework
is reviewed annually.
SECTION 4 ABOUT WESTPAC
61
For personal use only
ABOUT
WESTPAC
As at 30 September 2012, Westpac held $110 billion
in unencumbered liquid assets, up 7% compared
to $103 billion as at 30 September 2011. As at
30 September 2012, the Westpac Group held
sufficient liquid assets to cover all short term
wholesale debt outstanding and all wholesale
debt maturities for over 16 months.
4.3.3Regulatory Change
A number of important details regarding APRA’s draft
APS 210 and the RBA’s CLF are yet to be finalised,
including APRA’s response to the LCR revisions
announced by the BCBS in January 2013. As such,
the potential impact on the composition and size of
the Westpac Group’s liquid asset portfolio, and the
impacts on the liquidity risk management framework,
are yet to be confirmed. Further details are expected
from APRA in the first half of 2013.
On 16 December 2010, the BCBS released the
final text of the Basel III liquidity framework. The
framework introduces two new liquidity measures, the
Liquidity Coverage Ratio (“LCR”) and the Net Stable
Funding Ratio (“NSFR”). The LCR requires banks to
hold sufficient High-Quality Liquid Assets (“HQLA”),
as defined, to withstand 30 days under an acute
stress scenario. The BCBS also outlined a timetable
for implementation of each measure, with the LCR
to be introduced from 1 January 2015 and the NSFR
from 1 January 2018, with both liquidity measures
subject to an observation and review period.
On 6 January 2013, the Group of Central Bank
Governors and Heads of Supervision (“GHOS”),
the oversight body of the BCBS, announced that
it had endorsed a package of amendments to the
formulation of the LCR announced in 2010. The
package of amendments includes revisions to the
definition of HQLA and a timetable for phase-in of the
standard. The full text of the revised LCR was issued
by the BCBS on 7 January 2013.
In November 2011, APRA released for consultation a
discussion paper outlining its proposed implementation
of the Basel III liquidity reforms in Australia. The
Reserve Bank of Australia (“RBA”) concurrently issued
a press release regarding the Committed Liquidity
Facility (“CLF”). The CLF provides a pathway for
Australian banks to meet the requirements of the
LCR by allowing access to a pre-specified amount
of liquidity through repurchase agreements of eligible
securities outside the RBA’s normal market operations.
62
PROSPECTUS
For personal use only
5
INVESTMENT
RISKS
This Section describes some of the
potential risks associated with an
investment in the Westpac Capital Notes.
It is divided into risks that are specific to
the Westpac Capital Notes and risks that
relate to an investment in Westpac.
Before applying for Notes, you should
consider whether the Notes are a suitable
investment for you. There are risks associated
with an investment in the Notes, many of
which are outside the control of Westpac.
These risks include those in this Section 5 and
other matters referred to in this Prospectus.
For personal use only
INVESTMENT
RISKS
The Liquidation Sum is an amount of surplus
assets equal to $100 (as adjusted for a write-off or
Conversion under clauses 5.1 or 5.2 of the Westpac
Capital Notes Terms).
This Section sets out:
5.1 Investment risks relating to the Westpac
Capital Notes
5.2 Investment risks relating to Westpac
5.1 Investment risks
relating to the Westpac
Capital Notes
Set out in this Section 5.1 are risks associated
specifically with an investment in the Notes.
In particular, these risks arise from the nature of the
Notes and the Westpac Capital Notes Terms. You
should also consider the other risks in Section 5.2
as they relate to Westpac.
5.1.1 Investments in Westpac Capital
Notes are not deposit liabilities
or protected accounts under the
Banking Act or Financial Claims
Scheme
The Notes are not deposit liabilities or protected
accounts of Westpac for the purposes of the
Banking Act or Financial Claims Scheme and are
not subject to the depositor protection provisions of
Australian banking legislation (including the Australian
Government guarantee of certain bank deposits).
Therefore, the Notes are not guaranteed or insured
by any Australian government, government agency
or compensation scheme of Australia or any other
jurisdiction.
The claim for the Liquidation Sum effectively ranks
equally with Equal Ranking Capital Securities, but
is subordinated to Senior Creditors. As the Notes
rank after Senior Creditors, there is a risk that in the
Winding Up, there will be insufficient funds to provide
any return to Holders.
If the Notes have been Converted (including in
the unlikely occurrence of a Capital Trigger Event
or Non-Viability Trigger Event), Holders will hold
Ordinary Shares and rank equally with other holders
of Ordinary Shares in a Winding Up.
Where a Capital Trigger Event or Non-Viability
Trigger Event occurs, if for any reason Conversion
of Notes is not possible (for example due to
applicable laws, order of a court or action of any
government authority) and Westpac is not able to
issue the Ordinary Shares within 5 Business Days
following such an event, then the Holder’s rights
(including to Distributions) in relation to those Notes
are immediately and irrevocably terminated. Your
investment will lose all of its value and you will not
receive any compensation.
However, it is likely that any Capital Trigger Event
or Non-Viability Trigger Event would occur prior to a
Winding Up, requiring the Conversion of the Notes.
5.1.2Ranking of the Westpac Capital
Notes
5.1.3Market price of the Westpac Capital
Notes may fluctuate
In the unlikely event of a Winding Up, if the Notes are
still on issue they will rank:
Westpac has applied for quotation of the Notes on
ASX, but Westpac is unable to forecast the market
price and liquidity of the market for the Notes. The
market price for the Notes may fluctuate due to
various factors, including:
• ahead of Ordinary Shares;
• equally with all Equal Ranking Capital Securities
which currently include TPS 2003, TPS 2004,
Westpac TPS, Westpac SPS, Westpac SPS II
and Westpac CPS; and
• behind Senior Creditors.
If, in a Winding Up, the Notes have not been
Converted, Redeemed or Transferred, Holders
will be entitled to be paid the Liquidation Sum
at the commencement of the Winding Up (or if less
actual cash is available to Westpac for distribution
to Holders, a proportionate share of that cash).
64
• changes in Australian and international economic
and market conditions, interest rates, credit margins,
foreign exchange rates and equity markets;
• changes in investor perception and sentiment
in relation to Westpac or the financial services
industry;
• changes in the market price of Ordinary Shares
and/or other debt securities or other Capital
Securities issued by Westpac or by other issuers;
PROSPECTUS
For personal use only
• Westpac’s financial performance and position; and
• other major Australian and international events
such as hostilities and tensions, and acts
of terrorism.
It is possible that the Notes may trade at a market
price above or below the Face Value as a result of
these and other factors. The market price of the Notes
may be more sensitive than that of equity to changes
in interest rates, credit margins and/or other market
prices.
5.1.4 The liquidity of the Westpac Capital
Notes may be low
The market for the Notes may be less liquid than the
market for Ordinary Shares. Holders who wish to sell
their Notes may be unable to do so at an acceptable
price, or at all, if insufficient liquidity exists in the
market for the Notes.
Westpac does not guarantee the market price of the
Notes. There is a risk that if you sell Notes before the
Scheduled Conversion Date, you may lose some of
the money you invested.
5.1.5 Distributions may not be paid
Distributions are discretionary and only payable
subject to satisfaction of the Distribution Payment
Conditions, being:
• Westpac’s absolute discretion;
• the payment of Distributions not resulting in
a breach of Westpac’s capital requirements under
APRA’s prudential standards;
• the payment of Distributions not resulting in
Westpac becoming, or being likely to become,
insolvent; and
• APRA not otherwise objecting to the payment.
Payments of Distributions are non-cumulative. If a
Distribution is not paid in full because the Distribution
Payment Conditions are not satisfied, you will not
be entitled to receive the unpaid portion of that
Distribution. No interest accrues on any unpaid
Distributions and Westpac has no liability to the
Holder and the Holder has no claim in respect
of such non-payment. Non‑payment of a Distribution
will not be an event of default and Holders have no
right to apply for a Winding Up on the grounds of
Westpac’s failure to pay a Distribution.
Further, under the terms of some other securities
issued by Westpac, Westpac may not be able to
pay Distributions if it does not pay distributions on
those other securities. If this occurs, the dividend
and capital restrictions outlined above will apply.
5.1.6 Changes in the Distribution Rate
The Distribution Rate is calculated for each Distribution
Period by reference to the relevant 90 day Bank Bill
Rate, which is influenced by a number of factors and
varies over time. The Distribution Rate will fluctuate
and may increase and/or decrease over time with
movements in the 90 day Bank Bill Rate.
The movements in the 90 day Bank Bill Rate over
the last 10 years are set out in the chart below.
As the Distribution Rate fluctuates, there is a risk that
the rate may become less attractive when compared
to returns available on comparable securities issued
by Westpac or other issuers or other investments.
Westpac does not guarantee any particular rate of
return on the Notes.
90 day Bank Bill Rate (% per annum)1
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
Feb-03
Feb-05
Feb-07
Feb-09
Feb-11
Feb-13
Note:
1. Source: IRESS.
The above graph is for illustrative purposes only and does not indicate, guarantee or
forecast the actual Bank Bill Rate. Past levels are not necessarily indicative of future
levels. The actual Bank Bill Rate for the first and any subsequent Distribution Period
may be higher or lower than the rates in the above graph.
5.1.7A Capital Trigger Event or a NonViability Trigger Event may occur
A Capital Trigger Event occurs when Westpac
determines, or APRA notifies Westpac in writing
that it believes, that either or both the Westpac
Level 1 Common Equity Tier 1 Capital Ratio or
Westpac Level 2 Common Equity Tier 1 Capital
Ratio is equal to or is less than 5.125%.
SECTION 5 INVESTMENT RISKS
65
For personal use only
INVESTMENT
RISKS
The inclusion of the Capital Trigger Event and
Non‑Viability Trigger Event in the terms of regulatory
capital instruments is a relatively new requirement
under APRA’s prudential standards and is intended
to provide an advanced framework for the Notes to
replenish Westpac’s Common Equity Tier 1 Capital
if Westpac experiences significant financial difficulty.
The Common Equity Tier 1 Capital Ratio is the
ratio of Westpac’s Common Equity Tier 1 Capital
to its risk weighted assets, where Common Equity
Tier 1 Capital is the strongest form of capital held
by Westpac.
A Non-Viability Trigger Event occurs when APRA
notifies Westpac in writing that it believes:
• Conversion of all or some Notes (or conversion
or write down of other capital instruments of the
Westpac Group) is necessary because, without it,
Westpac would become non‑viable; or
• a public sector injection of capital, or equivalent
support, is necessary because, without it,
Westpac would become non-viable.
It should be noted that whether a Non-Viability Trigger
Event will occur is at the discretion of APRA and
there are currently no Australian precedents for this.
The circumstances in which APRA may exercise its
discretion are not limited to when APRA may have
a concern about a bank’s capital levels but may also
include when APRA has a concern about a bank’s
funding and liquidity levels.
Westpac has a framework in place to manage capital,
funding and liquidity risk to avoid experiencing financial
difficulty. Under Basel III, Westpac’s estimated
Common Equity Tier 1 Capital Ratio on a Level 2 basis
was 8.16% at 30 September 2012, which equated to
a surplus of more than $9.3 billion above the Common
Equity Tier 1 Capital Ratio of 5.125% (applicable to a
Capital Trigger Event) on 30 September 2012. Under
Basel III, Westpac’s estimated Common Equity Tier 1
Capital Ratio on a Level 1 basis was slightly lower at
8.15%, which was also considerably above the Capital
Trigger Event level of 5.125%.
In Section 5.2, a number of general risks associated
with Westpac’s businesses are outlined. If one, or
a combination, of these risks leads to a significant
capital loss, or prolonged difficulties in raising funding
or maintaining sufficient liquidity, Westpac believes
this may be the type of situation in which APRA
becomes concerned and notifies Westpac that it has
become non-viable. It should be noted that these are
examples. The risks outlined in Section 5.2 are not
exhaustive and there may be other risks which affect
the financial performance and condition of Westpac.
66
For further information about Westpac’s
capital, funding and liquidity risk management
and the Westpac Level 2 Common Equity
Tier 1 Capital Ratio surplus above the level of
5.125%, see Sections 4.2.1, 4.2.6, 4.3.1 and 4.3.2.
5.1.8 Conversion following a Capital
Trigger Event or Non-Viability
Trigger Event
Upon the occurrence of a Capital Trigger Event or
Non-Viability Trigger Event, all or some of the Notes
(or a percentage of the Face Value of each Note)
will Convert into the Conversion Number of Ordinary
Shares based on the VWAP during the 5 Business
Days prior to but not including the Capital Trigger
Event Conversion Date or Non-Viability Trigger Event
Conversion Date. Such Conversion is not subject to
the Scheduled Conversion Conditions being satisfied
and Holders will receive the Conversion Number of
Ordinary Shares on the Conversion Date, which will
not exceed the Maximum Conversion Number.
Any ASX trades in Notes that have not settled on the
date a Capital Trigger Event or Non-Viability Trigger
Event occurs will continue to settle in accordance
with the normal ASX T+3 settlement, although the
seller will be treated as having delivered, and the
buyer will be treated as having acquired, the number
of Ordinary Shares into which the Notes have been
Converted as a result of the occurrence of the
Capital Trigger Event or Non-Viability Trigger Event.
If a Non-Viability Trigger Event occurs because there
has been a public sector injection of capital, or other
public sector support, APRA may require the full Face
Value of Notes to be Converted.
The Maximum Conversion Number of Ordinary
Shares, in the case of Conversion following a Capital
Trigger Event or Non-Viability Trigger Event, will
be calculated based on a VWAP set to reflect 20%
of the Issue Date VWAP (as opposed to 50% in the
case of Scheduled Conversion).
PROSPECTUS
For personal use only
Accordingly, depending upon the Ordinary Share
price during the 5 Business Days prior to a Capital
Trigger Event Conversion Date or Non-Viability
Trigger Event Conversion Date, the value of Ordinary
Shares received for each Note may be less than the
Face Value of each Note.
5.1.9 Termination of rights where
Conversion not possible
following a Capital Trigger Event
or Non‑Viability Trigger Event
If for any reason Conversion of Notes is not possible
(for example due to applicable laws, order of a court
or action of any government authority) and Westpac
is not able to issue the Ordinary Shares within
5 Business Days following a Capital Trigger Event or
Non-Viability Trigger Event, then the Holder’s rights
(including to Distributions) in relation to those Notes
are immediately and irrevocably terminated. Your
investment will lose its value and you will not receive
any compensation.
5.1.10Exposure to Westpac’s financial
performance and position
Investments in Notes are an investment in Westpac
and may be affected by the ongoing performance and
financial position of Westpac.
On the Scheduled Conversion Date you will receive
Ordinary Shares issued by Westpac subject to the
satisfaction of the Scheduled Conversion Conditions.
Furthermore, Notes will Convert into Ordinary Shares
prior to the Scheduled Conversion Date in certain
specified circumstances – see Section 2.5.
As a result, if Westpac’s financial performance or
position declines, or if market participants anticipate
that it may decline, an investment in the Notes
could decline in value even if the Notes have not
been Converted.
5.1.11The Ordinary Share price used to
calculate the Conversion Number
of Ordinary Shares may be different
to the market price of Ordinary
Shares at the time of Conversion
The number of Ordinary Shares issued to Holders
upon Conversion will generally depend on the
average of the daily VWAP of Ordinary Shares over
the 20 Business Days on which trading in Ordinary
Shares took place immediately prior to the relevant
Conversion Date (or in the case of a Capital Trigger
Event or Non-Viability Trigger Event, the average
of the daily VWAP over 5 Business Days prior to the
Conversion Date). Accordingly, the Ordinary Share
price used to calculate the Conversion Number of
Ordinary Shares may be different to the market price
of Ordinary Shares at the time of Conversion so that
the value of Ordinary Shares you receive may be
less than the value of those Ordinary Shares based
on the Ordinary Share price on the Conversion Date.
The market price for Ordinary Shares following
Conversion will fluctuate due to various factors,
including:
• changes in Australian and international economic
and market conditions, interest rates, credit
margins, foreign exchange rates and equity
markets;
• changes in investor perception and sentiment
in relation to Westpac or the financial services
industry;
• changes in the market price of Ordinary Shares
and/or other debt securities or other Capital
Securities issued by Westpac or by other issuers;
• Westpac’s financial performance and position; and
• other major Australian and international events
such as hostilities and tensions, and acts
of terrorism.
These risks are described in Section 5.2 and may
have an impact on the market price of Ordinary
Shares, as well as the market price of the Notes.
5.1.12Holders cannot request Redemption,
Conversion or Transfer of the
Westpac Capital Notes
Holders have no right to request Redemption,
Conversion or Transfer of the Notes for any reason.
Therefore, to realise your investment you would have
to sell your Notes on ASX at the prevailing market
price. Depending on market conditions at the time,
the Notes may be trading at a market price below
the Face Value and/or the market for the Notes
may not be liquid. Westpac does not guarantee that
you will be able to sell your Notes on the ASX at an
acceptable price or at all.
SECTION 5 INVESTMENT RISKS
67
For personal use only
INVESTMENT
RISKS
5.1.13Conversion may or may not occur
on 8 March 2021
5.1.14Redemption at Westpac’s initiation
The Notes may Convert into Ordinary Shares on
8 March 2021, being the first possible Scheduled
Conversion Date. However, there is a risk that
Conversion will not occur on 8 March 2021 because
the Scheduled Conversion Conditions are not
satisfied – see Section 2.4.4. The Scheduled
Conversion Conditions will not be satisfied if the
VWAP of Ordinary Shares on the 25th Business
Day on which trading in Ordinary Shares took place
before (but not including) the Scheduled Conversion
Date is less than 56.12% of the Issue Date VWAP,
or the VWAP of Ordinary Shares during the period
of 20 Business Days on which trading in Ordinary
Shares took place before (but not including) the
Scheduled Conversion Date is less than 50.51% of
the Issue Date VWAP.
The market price of Ordinary Shares will fluctuate due
to various factors including:
• changes in Australian and international
economic and market conditions, interest rates,
credit margins, foreign exchange rates and equity
markets;
• changes in investor perception and sentiment
in relation to Westpac or the financial services
industry;
• changes in the market price of Ordinary Shares
and/or other debt securities or other Capital
Instruments issued by Westpac or by other issuers;
• Westpac’s financial performance and position; and
Westpac may also (subject to APRA’s prior written
approval) initiate Redemption of all (but not some
only) of the Notes following the occurrence of a
Franking Event, Tax Event or Regulatory Event,
provided that Westpac has obtained a supporting
opinion of reputable legal counsel or other tax adviser
(as applicable), experienced in such matters, or, in
the case of a Regulatory Event, confirmation from
APRA.
Redemption is subject to Westpac receiving APRA’s
prior written approval. There can be no certainty that
APRA will provide its prior written approval.
Redemption may occur on dates not previously
contemplated by you, which may be disadvantageous
in light of market conditions or your individual
circumstances. This means that the period for which
Holders will be entitled to the benefit of the rights
attaching to the Notes is unknown.
Where you receive cash on Redemption or Transfer,
the rate of return at which you could re-invest your
funds may be lower than the Distribution Rate at the
time. Further, upon Redemption you will receive the
Face Value of the Notes which may be less than their
market value immediately prior to Redemption.
5.1.15Transfer
• other major Australian and international events
such as hostilities and tensions, and acts
of terrorism.
There can be no assurance as to what the market
price of Ordinary Shares will be around 8 March 2021.
If Conversion does not occur on a potential
Scheduled Conversion Date, Distributions will
continue to be paid on the Notes, subject to the
Distribution Payment Conditions.
The Notes are perpetual instruments. If the Ordinary
Share price deteriorates significantly and never
recovers, it is possible that the Scheduled Conversion
Conditions will never be satisfied and, if this occurs,
the Notes may never Convert.
68
Westpac may (subject to APRA’s prior written
approval) initiate Redemption of some or all of
the Notes on 8 March 2019 (being the Optional
Redemption/Transfer Date).
On the Optional Redemption/Transfer Date, Westpac
may elect to issue a Transfer Notice, requiring Notes
to be Transferred to a Nominated Party for a cash
amount per Note equal to the Face Value.
Upon a Transfer of Notes, it will be the Nominated
Party’s obligation to pay the aggregate Face Value
of the Notes being Transferred, not Westpac’s.
If the Nominated Party does not pay this amount
to Holders, then Transfer will not proceed, in
which case Holders will continue to hold Notes in
accordance with the Westpac Capital Notes Terms.
Where you receive cash pursuant to a Transfer, the
rate of return at which you could re-invest your funds
may be lower than the Distribution Rate at the time.
PROSPECTUS
For personal use only
5.1.16No fixed maturity date
The Notes are perpetual instruments. The Notes
may Convert on a potential Scheduled Conversion
Date, but it is possible that market conditions at the
time may be such that the Scheduled Conversion
Conditions are not satisfied. If the Ordinary Share
price falls far enough it is possible that the Notes will
not Convert at any point in time. Furthermore, any
Redemption or Transfer is subject to the discretion
of Westpac, and, in respect of Redemption, obtaining
APRA’s prior written approval, and it is also possible
that neither of these occur at any point in time.
5.1.17Implementation of the Basel III
framework in Australia
Any fall in Westpac’s Common Equity Tier 1
Capital Ratio as a result of changes to APRA’s
implementation of the Basel III framework may
adversely impact the market price of the Notes
or potentially increase the chance at a later date
that Conversion of Notes takes place due to the
occurrence of a Capital Trigger Event (a Capital
Trigger Event will occur where Westpac’s Common
Equity Tier 1 Capital Ratio is equal to or less
than 5.125% on a Level 1 or Level 2 basis)
or a Non‑Viability Trigger Event (a Non-Viability
Trigger Event will occur where APRA notifies Westpac
in writing that it believes Conversion of some or all
of the Notes or a public sector injection of capital, or
equivalent support, is necessary because, without it,
Westpac would become non-viable).
See Section 5.1.8 for the risk associated with
Conversion of the Notes due to the occurrence of a
Capital Trigger Event or Non-Viability Trigger Event.
See Sections 2.7, 4.2.1, 4.2.2, 4.2.3 and 4.2.6
for more information about the Basel III capital
framework.
5.1.18Regulatory classification
APRA has confirmed that the Notes will be eligible for
inclusion as Additional Tier 1 Capital under APRA’s
prudential standard APS 111.
However, if APRA subsequently determines that
the Notes do not or will not qualify for Additional
Tier 1 Capital treatment (under the Basel III capital
adequacy framework, as amended from time to time),
Westpac may decide that a Regulatory Event has
occurred and may elect Redemption of the Notes
(subject to APRA’s prior written approval) – see
Sections 2.6.1 and 2.6.5.
A Regulatory Event may also occur as a result of
other regulatory changes. See Section 2.6.5 for
information on what constitutes a Regulatory Event,
and Section 5.2.1 for risks associated with regulation
for Westpac generally.
5.1.19Taxation treatment
A general description of the Australian taxation
consequences of investing in the Notes is set out
in the Taxation Letter from Allens in Section 6. This
Taxation Letter is provided in general terms and is
not intended to provide specific advice in relation to
the circumstances of any particular potential investor
or Holder. Accordingly, you should seek independent
advice in relation to your individual tax position before
you choose to apply for or invest in the Notes.
A Franking Event will occur if Westpac determines
(as supported by advice from reputable legal counsel
or other tax adviser) that as a result of a change or
proposed change in, or amendment or proposed
amendment to, the laws of Australia or their
application (including as a result of a court decision)
which was not expected by Westpac at the Issue
Date and has or is expected to become effective on
or after the Issue Date there is a material risk that any
Distribution would not be a frankable distribution
within the meaning of Division 202 of the Tax Act.
A Tax Event will occur if Westpac determines (as
supported by advice from reputable legal counsel or
other tax adviser) that there is a material risk that the
Westpac Group will incur more than an insubstantial
increase in costs or taxes in relation to the Notes
other than a tax or cost that Westpac expected at the
Issue Date.
In each of those situations, the risk, amendment or
court decision may itself be a Franking Event or Tax
Event, even before the cost or tax is incurred or the
Distribution ceases to be frankable. If a Franking
Event or Tax Event occurs, Westpac may Redeem
the Notes (subject to the conditions contained in the
Westpac Capital Notes Terms, including that Westpac
has obtained a supporting opinion of reputable legal
counsel or other tax adviser, experienced in such
SECTION 5 INVESTMENT RISKS
69
For personal use only
INVESTMENT
RISKS
Any issue of other securities may affect your ability to
recover the Liquidation Sum due to you on a Winding
Up, if the Notes are on issue at the time.
matters, in relation to the Franking Event or Tax
Event, as applicable – see Section 2.6.4).
5.1.20FATCA withholding and reporting
Legislation incorporating provisions referred to as
the Foreign Account Tax Compliance Act provisions
or “FATCA”, was passed in the United States
on 18 March 2010. This description is based on
guidance issued to date by the US Internal Revenue
Service (the “IRS”), including recently issued
final regulations. Future guidance may affect the
application of FATCA to the Notes.
It is possible that, in order to comply with FATCA,
Westpac (or, if Notes are held through another financial
institution, such other financial institution) may be
required (pursuant to an agreement with the IRS or
under applicable law) (i) to request certain information
from Holders or beneficial owners of Notes, which
information may be provided to the IRS, and (ii) to
withhold United States tax on some portion of payments
made after 31 December 2016 with respect to Notes
if such information is not provided or if payments are
made to certain foreign financial institutions that have
not entered into a similar agreement with the IRS (and
are not otherwise required to comply with the FATCA
regime under applicable law).
If Westpac or any other person is required to withhold
amounts under or in connection with FATCA from any
payments made in respect of Notes, Distributions will
not be adjusted, nor will any other amount be payable,
to compensate them for any such withholding.
5.1.21Future issues of securities
by Westpac
Westpac and members of the Westpac Group may,
at their absolute discretion, issue securities in the
future that:
• rank for distribution or payment of capital
(including in the Winding Up of Westpac or
another member of the Westpac Group) equally
with, behind or ahead of the Notes; or
• have the same or different dividend, interest
or distribution rates as the Notes; or
• have the same or different terms and conditions
as the Notes.
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The Westpac Capital Notes Terms do not require
Westpac to refrain from certain business changes or
require Westpac to operate within certain ratio limits.
An investment in Notes carries no right to participate
in any future issue of securities (whether equity,
hybrid, debt or otherwise) by any member of the
Westpac Group.
No prediction can be made as to the effect, if any,
such future issues of securities by an entity in the
Westpac Group may have on the market price
or liquidity of the Notes.
5.1.22Successor holding company
Where Westpac is replaced as the ultimate holding
company of the Westpac Group by an Approved
Successor and certain other conditions are satisfied,
Conversion of Notes will not be triggered but Westpac
may instead be allowed to make amendments
(provided APRA’s prior written approval is obtained)
to substitute the Approved Successor as the debtor
in respect of the Notes and the issuer of the ordinary
shares issued on Conversion and to make certain other
amendments to the Westpac Capital Notes Terms.
Accordingly, potential investors should be aware that, if:
• Westpac is replaced by an Approved Successor
as the ultimate holding company of the Westpac
Group; and
• a substitution of the Approved Successor as the
debtor in respect of the Notes and the issuer of
the ordinary shares on Conversion is effected
under the Westpac Capital Notes Terms,
Holders will be obliged to accept Approved
Successor Shares and will not receive Ordinary
Shares on Conversion.
Potential investors should also be aware that
Holders may not have a right to vote on any
proposal to approve, implement or give effect
to the establishment of an Approved Successor.
Westpac has not made a decision to substitute an
Approved Successor as the ultimate holding company
of the Westpac Group.
PROSPECTUS
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Where Westpac transfers its assets to an Approved
Successor, Westpac may as a result have reduced
assets which may affect its credit rating and the
likelihood Holders will receive their claims in full
in a Winding Up.
There is also a risk that establishment of a successor
holding company that is not an Approved Successor
is treated as an Acquisition Event, leading to the
Conversion of the Notes. Further, if the establishment
of a successor holding company is treated as an
Acquisition Event and Conversion does not occur,
a number of different risks may arise for Holders,
including that Westpac may be assigned a different
credit rating and its financial position may be
materially altered thereby adversely affecting its
ability to pay Distributions.
5.1.23Amendment of the Westpac Capital
Notes Terms
Westpac may, with APRA’s prior written approval
where required and subject to compliance with
applicable laws, amend the Westpac Capital Notes
Terms without the approval of Holders. This includes
an amendment which, in Westpac’s opinion, is:
• of a formal, minor or technical nature;
• made to cure ambiguities and manifest errors;
• necessary to give effect to the listing of the Notes
on any stock exchange (and is not considered
by Westpac to be materially prejudicial to the
interest of Holders as a whole) or to comply with
applicable laws; or
• generally not materially prejudicial to the interest
of Holders as a whole.
Westpac may also amend the Westpac Capital
Notes Terms, with APRA’s prior written approval,
if the amendment has been approved by a Special
Resolution of Holders or is necessary to effect the
substitution of an Approved Successor as the debtor
in respect of the Notes and the issuer of ordinary
shares on Conversion.
Amendments under these powers are binding on all
Holders despite the fact that a Holder may not agree
with the amendment.
amendment may impact, or potentially impact, the
eligibility of the Notes as Additional Tier 1 Capital.
5.2 Investment risks
relating to Westpac
Set out in this Section 5.2 are specific risks
associated with an investment in Westpac. These
risks are relevant to an investment in Notes and
Ordinary Shares as the value of such an investment
in Notes will depend on Westpac’s financial
performance and position, regardless of when or if
the Notes are Converted or Redeemed.
5.2.1 Westpac’s businesses are highly
regulated and it could be adversely
affected by failing to comply with
existing laws and regulations or
by changes in laws and regulations
and regulatory policy
As a financial institution, Westpac is subject
to detailed laws and regulations in each of the
jurisdictions in which it operates or obtains funding,
including Australia, New Zealand and the United
States. Westpac is also supervised by a number
of different regulatory authorities which have broad
administrative power over its businesses. In Australia,
the relevant regulatory authorities include APRA,
ASIC, ASX, the Reserve Bank of Australia (“RBA”), the
Australian Competition and Consumer Commission
(“ACCC”) and the Australian Transaction Reports and
Analysis Centre (“AUSTRAC”). The Reserve Bank of
New Zealand has supervisory oversight of Westpac’s
New Zealand operations. In the United States
Westpac is subject to supervision and regulation by
the US Office of the Comptroller of the Currency, the
Board of Governors of the Federal Reserve System
and the US Securities and Exchange Commission.
Westpac is responsible for ensuring that it complies
with all applicable legal and regulatory requirements
(including accounting standards) and industry
codes of practice in the jurisdictions in which it
operates or obtains funding, as well as meeting
its ethical standards.
APRA’s prior written approval to amend the Westpac
Capital Notes Terms is always required where the
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Compliance risk arises from these legal and regulatory
requirements. If Westpac fails to comply with
applicable laws and regulations, it may be subject
to fines, penalties or restrictions on its ability to do
business. An example of the broad administrative
power available to regulatory authorities is the power
available to APRA under the Banking Act in certain
circumstances to investigate Westpac’s affairs and/or
issue a direction to it (such as a direction to comply
with a prudential requirement, to conduct an audit, to
remove a director, executive officer or employee or
not to undertake transactions). Any such costs and
restrictions resulting from the exercise of these powers
could adversely affect Westpac’s business, reputation,
prospects, financial performance or financial condition.
As with other financial services providers,
Westpac continues to face increased supervision
and regulation in most of the jurisdictions in which it
operates or obtains funding, particularly in the areas
of funding, liquidity, capital adequacy and prudential
regulation. For example in December 2010 the BCBS
announced a revised global regulatory framework,
known as Basel III. Basel III will, among other things,
increase the required quality and quantity of capital
held by banks and introduce new minimum standards
for the management of liquidity risk. APRA has
announced that it supports the Basel III framework
and it will incorporate the framework into its prudential
standards. The Basel III framework came into effect
on 1 January 2013, subject to various transitional
arrangements.
During the year ended 30 September 2012, there has
also been a series of other regulatory releases from
authorities in the various jurisdictions in which Westpac
operates or obtains funding proposing significant
regulatory change for financial institutions. This
includes global “over the counter” derivatives reform
and recovery and resolution planning requirements
proposed by the Financial Stability Board, as well as
other components of the US Dodd-Frank legislation
(including the Volcker Rule) which is designed to
reform the entire system for the supervision and
regulation of financial firms that operate in or have a
connection with the United States, including foreign
banks like Westpac. Other areas of potential change
that could impact Westpac include changes to
accounting and reporting requirements, tax legislation,
regulation relating to remuneration, consumer
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protection and competition legislation and bribery,
anti-money laundering and counter‑terrorism financing
laws. In addition, further changes may occur driven by
policy, prudential or political factors.
Regulation is becoming increasingly extensive and
complex. Some areas of potential regulatory change
involve multiple jurisdictions seeking to adopt a
coordinated approach. Such an approach may not
appropriately respond to the specific requirements
of the jurisdictions in which Westpac operates and,
in addition, such changes may not be consistently
introduced across jurisdictions.
Changes may also occur in the oversight approach
of regulators. It is possible that governments in
jurisdictions in which Westpac operates or obtains
funding might revise their application of existing
regulatory policies that apply to, or impact, Westpac’s
business, including for reasons relating to national
interest and/or systemic stability.
Regulatory changes and the timing of their
introduction continue to evolve and Westpac currently
manages its businesses in the context of regulatory
uncertainty. The nature and impact of future changes
are not predictable and are beyond Westpac’s
control. Regulatory compliance and the management
of regulatory change is an increasingly important part
of Westpac’s strategic planning. Westpac expects it
will be required to continue to invest significantly in
compliance and the management and implementation
of regulatory change and, at the same time,
significant management attention and resources
will be required to update existing processes and
procedures or implement new processes and
procedures to comply with the new regulations.
Regulatory change may also impact Westpac’s
operations by requiring it to have increased levels
of liquidity and higher levels of, and better quality,
capital as well as place restrictions on the businesses
Westpac conducts or require it to alter its product
and service offerings. If regulatory change has any
such effect, it could adversely affect one or more of
Westpac’s businesses, restrict Westpac’s flexibility,
require Westpac to incur substantial costs and impact
the profitability of one or more of Westpac’s business
lines. Any such costs or restrictions could adversely
affect Westpac’s business, prospects, financial
performance or financial condition.
PROSPECTUS
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5.2.2Adverse credit and capital market
conditions may significantly affect
Westpac’s ability to meet funding
and liquidity needs and may
increase its cost of funding
Westpac relies on credit and capital markets to fund
its business and as a source of liquidity. Westpac’s
liquidity and costs of obtaining funding are related
to credit and capital market conditions.
Global credit and capital markets have experienced
extreme volatility, disruption and decreased liquidity
in recent years. While there have been periods
of stability in these markets, the environment has
become more volatile and unpredictable. This has
been exacerbated by the potential for sovereign
debt defaults and/or banking failures in Europe
which has contributed to volatility in stock prices
and credit spreads. Adding to the uncertainty has
been a slowing in the economic outlook for a number
of countries, including China and the uncertain
recovery of the United States economy. Westpac’s
direct exposure to the affected European countries
is immaterial, with the main risks Westpac faces
being damage to market confidence, changes to the
access and cost of funding and a slowing in global
activity or through other impacts on entities with
whom Westpac does business.
As of 30 September 2012, approximately 35% of
Westpac’s total net funding originated from domestic
and international wholesale markets, of this around
59% was sourced outside Australia and New Zealand.
ratings and credit market capacity. Even if available,
the cost of these alternatives may be more expensive
or on unfavourable terms, which could adversely
affect Westpac’s results of operations, liquidity,
capital resources and financial condition. There
is no assurance that Westpac will be able to obtain
adequate funding and do so at acceptable prices, nor
that it will be able to recover any additional costs.
If Westpac is unable to source appropriate
funding, it may also be forced to reduce its lending
or begin to sell liquid securities. Such actions may
adversely impact Westpac’s business, prospects,
liquidity, capital resources, financial performance
or financial condition.
Westpac enters into collateralised derivative positions,
which may require Westpac to post additional collateral
based on adverse movements in market rates, which
would adversely affect Westpac’s liquidity.
5.2.3 Failure to maintain its current
credit ratings could adversely affect
Westpac’s cost of funds, liquidity,
competitive position and access to
capital markets
Credit ratings are opinions on Westpac’s
creditworthiness. Westpac’s credit ratings affect the
cost and availability of its funding from capital markets
and other funding sources and they may be important
to customers or counterparties when evaluating
Westpac’s products and services. Therefore,
maintaining high quality credit ratings is important.
If market conditions deteriorate due to economic,
financial, political or other reasons, Westpac’s funding
costs may be adversely affected and its liquidity,
funding and lending activities may be constrained.
The credit ratings assigned to Westpac by rating
agencies are based on an evaluation of a number
of factors, including Westpac’s financial strength,
structural considerations regarding the Australian
financial system and the credit rating of the Australian
Federal Government. A credit rating downgrade
could be driven by the occurrence of one or more
of the other risks identified in this Section 5.2 or by
other events including changes to the methodologies
used by the rating agencies to determine ratings.
If Westpac’s current sources of funding prove to
be insufficient, it may be forced to seek alternative
financing. The availability of such alternative financing,
and the terms on which it may be available, will depend
on a variety of factors, including prevailing market
conditions, the availability of credit, Westpac’s credit
Standard & Poor’s has changed its methodology
for determining bank ratings and published new
criteria on 9 November 2011. On 1 December 2011
Standard & Poor’s announced the updated ratings
for certain banks across the Asia-Pacific region under
the revised approach and Westpac, along with the
A shift in investment preferences of businesses
and consumers away from bank deposits toward
other asset or investment classes would increase
Westpac’s need for funding from relatively less
stable or more expensive forms of funding.
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other major Australian banks, was issued a lower
long‑term, senior unsecured credit rating. The outlook
for the credit rating is stable.
if destabilised, could result in currency fluctuations
and operational disruptions that negatively impact
the Westpac Group.
On 24 February 2012, following its review of the
debt ratings of the four major Australian banks,
Fitch announced that Westpac had been issued
a lower long-term senior unsecured issuer default
rating, in line with the other major Australian banks.
The outlook for the credit rating is stable.
Any such market and economic disruptions
could adversely affect financial institutions such
as Westpac because consumer and business
spending may decrease, unemployment may rise
and demand for the products and services Westpac
provides may decline, thereby reducing its earnings.
These conditions may also affect the ability of
Westpac’s borrowers to repay their loans or its
counterparties to meet their obligations, causing
Westpac to incur higher credit losses. These events
could also result in the undermining of confidence in
the financial system, reducing liquidity and impairing
Westpac’s access to funding and impairing Westpac’s
customers and counterparties and their businesses.
If this were to occur, Westpac’s business, prospects,
financial performance or financial condition could
be adversely affected.
If Westpac fails to maintain its current credit ratings,
this could adversely affect its cost of funds and
related margins, collateral requirements, liquidity,
competitive position and its access to capital markets.
The extent and nature of these impacts would depend
on various factors, including the extent of any ratings
change, whether Westpac’s ratings differ among
agencies (split ratings) and whether any ratings
changes also impact Westpac’s peers or the sector.
5.2.4A systemic shock in relation to
the Australian, New Zealand or
other financial systems could have
adverse consequences for Westpac
or its customers or counterparties
that would be difficult to predict
and respond to
There is a risk that a major systemic shock could
occur that causes an adverse impact on the
Australian, New Zealand or other financial systems.
As outlined above, the financial services industry
and capital markets have been, and may continue
to be, adversely affected by continuing market
volatility and the negative outlook for global economic
conditions. During the first half of 2012 there was
an increased focus on the potential for sovereign
debt defaults and/or significant bank failures in
the 17 countries comprising the Eurozone, which
exacerbated these conditions. There can be
no assurance that the market disruptions in the
Eurozone, including the increased cost of funding
for certain Eurozone governments, will not spread,
nor can there be any assurance that future assistance
packages will be available or sufficiently robust to
address any further market contagion in the Eurozone
or elsewhere. If the situation in the Eurozone
worsens, there could be serious implications
for the European Union and the euro, which,
74
The nature and consequences of any such event are
difficult to predict and there can be no guarantee that
Westpac could respond effectively to any such event.
5.2.5 Declines in asset markets
could adversely affect Westpac’s
operations or profitability
Declines in Australian, New Zealand or other asset
markets, including equity, residential and commercial
property and other asset markets, could adversely
affect Westpac’s operations and profitability.
Declining asset prices impact Westpac’s wealth
management business and other asset holdings.
Earnings in Westpac’s wealth management business
are, in part, dependent on asset values because it
receives fees based on the value of securities and/
or assets held or managed. A decline in asset prices
could negatively impact the earnings of this business.
Declining asset prices could also impact customers
and counterparties and the value of security Westpac
holds against loans and derivatives which may impact
its ability to recover amounts owing to it if customers
or counterparties were to default. It may also affect
Westpac’s level of provisioning which in turn impacts
profitability.
PROSPECTUS
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5.2.6 Westpac’s business is substantially
dependent on the Australian and
New Zealand economies
Westpac’s revenues and earnings are dependent
on economic activity and the level of financial
services its customers require. In particular, lending
is dependent on various factors including economic
growth, business investment, levels of employment,
interest rates and trade flows in the countries
in which Westpac operates.
Westpac currently conducts the majority of its
business in Australia and New Zealand and,
consequently, its performance is influenced by the
level and cyclical nature of lending in these countries.
These factors are in turn impacted by both domestic
and international economic conditions, natural
disasters and political events. A significant decrease
in the Australian and New Zealand housing markets
or property valuations could adversely impact
Westpac’s home lending activities because the ability
of its borrowers to repay their loans or counterparties
to honour their obligations may be affected, causing
Westpac to incur higher credit losses, or the demand
for Westpac’s home lending products may decline.
Adverse changes to the economic and business
conditions in Australia and New Zealand and other
countries such as China, India and Japan, could
also adversely affect the Australian economy and
customers. In particular, due to the current relationship
between Australia and China in the mining and
resources sectors, a slowdown in China’s economic
growth could negatively impact the Australian
economy. Changes in economic conditions could in
turn result in reduced demand for Westpac’s products
and services and affect the ability of its borrowers
to repay their loans. If this were to occur, it could
negatively impact Westpac’s business, prospects,
financial performance or financial condition.
5.2.7An increase in defaults in credit
exposures could adversely
affect Westpac’s liquidity, capital
resources, financial performance
or financial condition
Credit risk is a significant risk and arises primarily from
Westpac’s lending activities. The risk arises from the
possibility that some customers and counterparties
will be unable to honour their obligations to Westpac,
including the repayment of loans and interest.
Credit risk also arises from certain derivative contracts
Westpac enters into and from Westpac’s dealings with,
and holdings of, debt securities issued by other banks,
financial institutions, companies, governments and
government bodies the financial conditions of which
may be impacted to varying degrees by economic
conditions in global financial markets.
Westpac holds collective and individually assessed
provisions for its credit exposures. If economic
conditions deteriorate, some customers and/or
counterparties could experience higher levels of
financial stress and Westpac may experience a
significant increase in defaults and write-offs, and
be required to increase its provisioning. Such events
would diminish available capital and could adversely
affect Westpac’s liquidity, capital resources, financial
performance or financial condition.
5.2.8 Westpac faces intense competition
in all aspects of its business
The financial services industry is highly competitive.
Westpac competes, both domestically and
internationally, with retail and commercial banks,
asset managers, investment banking firms, brokerage
firms, other financial service firms and businesses
in other industries with emerging financial services
aspirations. This includes specialist competitors that
may not be subject to the same capital and regulatory
requirements and therefore may be able to operate
more efficiently.
If Westpac is unable to compete effectively in its
various businesses and markets, its market share
may decline. Increased competition may also
adversely affect Westpac’s results of operations
by diverting business to its competitors or creating
pressure to lower margins.
Increased competition for deposits could also
increase Westpac’s cost of funding and cause
Westpac to access other types of funding. Westpac
relies on bank deposits to fund a significant portion
of its balance sheet and deposits have been a
relatively stable source of funding. Westpac competes
with banks and other financial services firms for
such deposits. To the extent that it is not able to
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successfully compete for deposits, Westpac would
be forced to rely more heavily on more expensive
or less stable forms of funding, or reduce lending.
Westpac is also dependent on its ability to
offer products and services that match evolving
customer preferences. If Westpac is not successful
in developing or introducing new products and
services or responding or adapting to changes
in customer preferences and habits, Westpac
may lose customers to its competitors. This could
adversely affect Westpac’s business, prospects,
financial performance and financial condition.
5.2.9 Westpac could suffer losses due
to market volatility
Westpac is exposed to market risk as a consequence
of its trading activities in financial markets and
through the asset and liability management of its
financial position. In Westpac’s financial markets
trading business, it is exposed to losses arising from
adverse movements in levels and volatility of interest
rates, foreign exchange rates, commodity prices,
credit prices and equity prices. If Westpac were to
suffer substantial losses due to any market volatility,
this may adversely affect its business, prospects,
liquidity, capital resources, financial performance
or financial condition.
5.2.10Westpac could suffer losses due
to technology failures
The reliability and security of Westpac’s information
and technology infrastructure and its customer
databases are crucial in maintaining its banking
applications and processes. There is a risk that
these information and technology systems might
fail to operate properly or become disabled as
a result of events that are wholly or partially
beyond Westpac’s control or that Westpac’s
security measures may prove inadequate or
ineffective. Any failure of these systems could
result in business interruption, loss of customers,
theft of intellectual property and customer data,
reputational damage and claims for compensation
and regulatory investigations and penalties, which
could adversely affect Westpac’s business, prospects,
financial performance or financial condition.
76
Further, Westpac’s ability to develop and deliver
products and services to its customers is dependent
upon technology that requires periodic renewal.
Westpac is constantly managing technology projects
including projects to consolidate duplicate technology
platforms, simplify and enhance its technology
and operations environment, improve productivity
and provide for a better customer experience.
This includes Westpac’s current Strategic Investment
Priorities (SIPs) program. Failure to implement these
projects or manage associated change effectively
could result in cost overruns, a failure to achieve
anticipated productivity, operational instability,
reputational damage or operating technology that
could place Westpac at a competitive disadvantage
and may adversely affect its financial performance.
5.2.11Westpac could suffer losses due
to operational risks
Operational risk is the risk of loss resulting
from technology failure, inadequate or failed
internal processes, people, systems or from
external events. In addition to technology failure
(see Section 5.2.10), Westpac, as a financial
services organisation, is exposed to a variety
of operational risks.
Westpac’s operations rely on the secure processing,
storage and transmission of confidential and other
information on its computer systems and networks,
and the systems and networks of external suppliers.
Although Westpac implements significant measures
to protect the security and confidentiality of its
information, there is a risk that the computer systems,
software and networks on which Westpac relies
may be subject to security breaches, unauthorised
access, computer viruses, external attacks or internal
breaches that could have an adverse security impact
and compromise Westpac’s confidential information
or that of its customers and counterparts. Any such
security breach could result in regulatory enforcement
actions, reputational damage and reduced operational
effectiveness. Such events could subsequently
adversely affect Westpac’s business, prospects,
financial performance or financial condition.
Westpac is also highly dependent on the conduct
of its employees. Westpac could, for example, be
adversely affected in the event of human error,
inadequate or failed processes, or if an employee
PROSPECTUS
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engages in fraudulent conduct. While Westpac has
policies and processes to minimise the risk of human
error and employee misconduct, these policies and
processes may not always be effective.
Fraudulent conduct can also emerge from external
parties seeking to access Westpac’s systems and
customers’ accounts. If systems, procedures and
protocols for managing and minimising fraud fail, or
are ineffective, they could lead to loss which could
adversely affect Westpac’s business, prospects,
reputation, financial performance or financial
condition.
Westpac relies on a number of suppliers, both in
Australia and overseas, to provide services to it and
its customers. Failure by these suppliers to deliver
services as required could disrupt services and
adversely impact Westpac’s operations, profitability
or reputation.
Operational risks could impact on Westpac’s
operations or adversely affect demand for its products
and services. Operational risks can directly impact
Westpac’s reputation and result in financial losses
which would adversely affect Westpac’s financial
performance or financial condition.
5.2.12Westpac could suffer losses due
to failures in risk management
strategies
Westpac has implemented risk management
strategies and internal controls involving processes
and procedures intended to identify, monitor and
mitigate the risks to which it is subject, including
liquidity risk, credit risk, market risk (including interest
rate and foreign exchange risk) and operational risk.
However, there are inherent limitations with any
risk management framework as there may exist,
or emerge in the future, risks that Westpac has
not anticipated or identified.
If any of Westpac’s risk management processes
and procedures prove ineffective or inadequate
or are otherwise not appropriately implemented,
Westpac could suffer unexpected losses and
reputational damage which could adversely affect
its business, prospects, financial performance
or financial condition.
5.2.13Westpac could suffer losses due
to environmental factors
Westpac and its customers operate businesses
and hold assets in a diverse range of geographical
locations. Any significant environmental change
or external event (including fire, storm, flood,
earthquake or pandemic) in any of these locations
has the potential to disrupt business activities,
impact on Westpac’s operations, damage property
and otherwise affect the value of assets held in the
affected locations and its ability to recover amounts
owing to it. In addition, such an event could have
an adverse impact on economic activity, consumer
and investor confidence, or the levels of volatility
in financial markets.
This risk of losses due to environmental factors is
also relevant to Westpac’s insurance business. The
frequency and severity of external events such as
natural disasters is difficult to predict and it is possible
that the amounts Westpac reserves for such events
may not be adequate to cover actual claims that
may arise, which could adversely affect its business,
prospects, financial performance or financial condition.
5.2.14Reputational damage could harm
Westpac’s business and prospects
Westpac’s ability to attract and retain customers
and its prospects could be adversely affected if its
reputation is damaged.
There are various potential sources of reputational
damage including potential conflicts of interest,
pricing policies, failing to comply with legal and
regulatory requirements, ethical issues, engagements
and conduct of external suppliers, failing to comply
with money laundering laws, trade sanctions and
counter-terrorism finance legislation or privacy laws,
litigation, information security policies, improper
sales and trading practices, failing to comply with
personnel and supplier policies, improper conduct
of companies in which Westpac holds strategic
investments, technology failures, security breaches
and risk management failures. Westpac’s reputation
could also be adversely affected by the actions
of the financial services industry in general or from
the actions of its customers and counterparties.
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Failure to appropriately address issues that could
or do give rise to reputational risk could also impact
the regulatory change agenda, give rise to additional
legal risk, subject Westpac to regulatory enforcement
actions, fines and penalties or remediation costs, or
harm its reputation among its customers, investors
and the marketplace. This could lead to loss of
business which could adversely affect Westpac’s
business, prospects, financial performance or
financial condition.
5.2.15Westpac could suffer losses if
it fails to syndicate or sell down
underwritten securities
As a financial intermediary Westpac underwrites
listed and unlisted debt and equity securities.
Underwriting activities include the development of
solutions for corporate and institutional customers
who need capital and investor customers who
have an appetite for certain investment products.
Westpac may guarantee the pricing and placement
of these facilities. Westpac could suffer losses if it
fails to syndicate or sell down its risk to other market
participants. This risk is more pronounced in times
of market volatility.
5.2.16Certain strategic decisions may
have adverse effects on Westpac’s
business
Westpac, at times, evaluates and may undertake
strategic decisions which may include business
expansion. The expansion, or integration of a new
business, can be complex and costly and may require
Westpac to comply with additional local or foreign
regulatory requirements which may carry additional
risks. These decisions may, for a variety of reasons,
not deliver the anticipated positive business results
and could have a negative impact on Westpac’s
business, prospects, engagement with regulators,
financial performance or financial condition.
The summary of risks in this Section 5 is not
exhaustive and you should read this Prospectus
in its entirety and consult your financial adviser
or other professional adviser before deciding
whether to invest in Westpac Capital Notes.
78
PROSPECTUS
For personal use only
6
TAXATION
LETTER
If you are considering applying for Westpac
Capital Notes, it is important that you understand
the taxation consequences of investing in the
Westpac Capital Notes. You should read the
Taxation Letter from Allens in this Section, and
discuss the taxation consequences with your tax
adviser, financial adviser or other professional
adviser, before deciding whether to invest.
Allens
Deutsche Bank Place
Corner Hunter and Phillip Streets
Sydney NSW 2000 Australia
TAXATION
LETTER
GPO Box 50
Sydney NSW 2001 Australia
DX 105 Sydney
T +61 2 9230 4000
F +61 2 9230 5333
www.allens.com.au
ABN 47 702 595 758
For personal use only
7 February 2013
The Directors
Westpac Banking Corporation
Westpac Place
275 Kent Street
Sydney NSW 2000
Ladies and Gentlemen
Westpac Capital Notes
We have been requested to provide a taxation summary regarding the principal Australian taxation
implications for holders of Westpac Capital Notes to be issued by Westpac Banking Corporation
(Westpac) for inclusion in the Prospectus.
The summary below is a general outline of the likely tax consequences for individuals, companies
and complying superannuation entities who apply to acquire Westpac Capital Notes under the
Prospectus, are residents of Australia for the purpose of Australian income tax laws and who hold
Westpac Capital Notes on capital account (Investors).
The summary does not address all taxation consequences of ownership of Westpac Capital Notes,
nor the positions of other persons who acquire Westpac Capital Notes in the course of a business of
trading or investing in securities, such as share traders, investment companies, banks or insurance
companies, or who otherwise hold Westpac Capital Notes on revenue account or as trading stock.
Potential Investors should be aware that the actual tax consequences of ownership of Westpac
Capital Notes may differ depending on their individual circumstances. Information contained in
this summary is necessarily general in nature and Investors in Westpac Capital Notes will
need to consult their own professional tax advisers regarding the consequences of acquiring,
holding or disposing of Westpac Capital Notes in light of their particular circumstances.
This summary assumes that all of the transactions described in the Prospectus will be carried out in
the manner described in the Prospectus.
This summary is provided solely for the benefit of Westpac. It is not to be relied upon by any other
person. Allens has consented to the inclusion of this letter in the Prospectus, but this letter should
not be taken as a statement about any other matter in the Prospectus or in relation to Westpac or the
performance of any investment in Westpac, and is subject to the terms of Allens' consent to be
named as set out in the Prospectus.
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For personal use only
This summary reflects the current provisions of the Income Tax Assessment Act 1936 (Cth) (1936
Act) and the Income Tax Assessment Act 1997 (Cth) (1997 Act), the regulations made under those
Acts and the current administrative practice of the Australian Taxation Office (ATO). Except where
expressly stated, it does not otherwise take into account or anticipate changes in taxation laws,
whether by way of future judicial decision or legislative actions.
Capitalised terms used in this letter have the same meaning as in the Prospectus, unless otherwise
indicated.
For the purpose of preparing this summary we have been instructed by Westpac that:

the Westpac Capital Notes will be issued by Westpac in Australia;

Westpac intends to apply the proceeds from the issue of the Westpac Capital Notes for general
business purposes; and

Distributions paid on Westpac Capital Notes are expected, but not guaranteed, to be fully
franked.
Westpac has applied for a public Class Ruling requesting confirmation of the ATO's views on the
principal tax issues considered below. A Class Ruling will only be issued after the issue of the
Westpac Capital Notes. When it has been issued, it will be available on the ATO and Westpac
websites.
1.
Distributions
(a)
Franking credits and tax offsets
The Westpac Capital Notes should be regarded as 'non-share equity interests' and
Distributions should be treated as 'non-share dividends' which are frankable.
Investors will be required to include the amounts of any Distributions in their
assessable income.
Any franking credits attached to those Distributions should also be included in the
assessable income of Investors and tax offsets should generally be available, equal
to the amounts of the franking credits, subject to the requirements that the Westpac
Capital Notes be held 'at risk' for the requisite periods (see below regarding the
'holding period rule') and that the Commissioner of Taxation does not make an
adverse determination (see below regarding the 'anti-avoidance rule').
Where Investors that are individuals or complying superannuation entities are
entitled to tax offsets, those offsets will either reduce any tax payable by the
Investor, or give rise to a tax refund to the extent that the tax offsets exceed the tax
that is otherwise payable by the Investor.
To the extent that any Distributions are unfranked, those amounts would also be
included in an Investor's assessable income, without any tax offsets.
Investors that are companies are not entitled to refunds of excess tax offsets, but
will be entitled to a credit in their franking account equal to the amount of the
franking credits attached to a Distribution, subject to the qualifications mentioned
above and discussed further below.
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Westpac Banking Corporation
TAXATION
LETTER
(b)
Holding period rule
For personal use only
An Investor will not be entitled to tax offsets in respect of franking credits on a
franked Distribution unless the Investor is a 'qualified person' in relation to the
Distribution.
To be a 'qualified person' in relation to a Distribution, an Investor must have held
the Westpac Capital Notes 'at risk' for a continuous period of at least 90 days
(excluding the days of acquisition and disposal) during:

the 'primary qualification period', which is the period beginning on the day after
the day on which the Westpac Capital Notes are acquired by an Investor and
th
ending on the 90 day after the day that the Westpac Capital Notes became
ex-Distribution; or

if an Investor, or an associate, is under an obligation to make 'related
payments' (which have the effect of passing on the benefit of the Distribution
to other entities) in respect of the Distribution, the 'secondary qualification
th
period', which is the period beginning on the 90 day before, and ending on
th
the 90 day after, the day that the Westpac Capital Notes became exDistribution.
To be held 'at risk', the Investor must effectively retain 30% or more of the risks and
benefits associated with holding the Westpac Capital Notes. Whether or not the
Westpac Capital Notes are held 'at risk' by an Investor during the relevant periods
will depend upon whether the Investor has financial positions or undertakes risk
management strategies (e.g. using limited recourse loans, options or forward sale
contracts) in relation to the Westpac Capital Notes. On the basis that Investors will
continue to hold the Westpac Capital Notes for at least the 'primary qualification
period', will not have any financial positions or enter into any relevant risk
management strategies in relation to the Westpac Capital Notes, and will not be
under an obligation to make 'related payments' to other entities, Investors should
be 'qualified persons' in relation to Distributions on the Westpac Capital Notes.
Investors who are individuals and who will not claim tax offsets in any one year in
excess of $5,000, will automatically be taken to be 'qualified persons' in relation to
all Distributions that they receive (provided that they are not under an obligation to
make a 'related payment' as described above).
The application of the franking rules to Investors will depend upon the particular
circumstances of each Investor. Accordingly, each Investor should seek
independent advice as to whether they will be treated as a 'qualified person' in
relation to Distributions received on the Westpac Capital Notes.
(c)
Anti-avoidance rule
Section 177EA of the 1936 Act is an anti-avoidance provision which is designed to
counter schemes where one of the purposes (other than an incidental purpose) of
the scheme is to inappropriately divert franking credits and obtain an imputation
benefit. There are a number of different objective factors that the Commissioner
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Westpac Banking Corporation
may take into account in forming a view as to whether a scheme has such a
purpose. Where section 177EA applies, the Commissioner may make a written
For personal use only
determination with the effect of either:
(i)
imposing a franking debit on the distributing entity's franking account; or
(ii)
denying the imputation benefit on the Distribution that flowed directly or
indirectly to the relevant taxpayer.
Westpac has received a Private Ruling from the Commissioner of Taxation
confirming that the Commissioner would not make any such determination under
section 177EA in relation to the Westpac Capital Notes. That ruling is binding on
the Commissioner only in favour of Westpac. However, the Commissioner has
indicated that, in the usual case, he would not ordinarily be expected to assert that
section 177EA applied to a convertible hybrid which satisfied the requirements to
be classified as Tier 1 capital. Accordingly, we expect the Commissioner to make
a favourable Class Ruling on this issue, which would be binding on the
Commissioner in favour of subscribers for Westpac Capital Notes.
In Mills v Commissioner of Taxation [2012] HCA 51 (14 November 2012), the High
Court held that section 177EA did not apply to certain notes issued by the New
Zealand branch of the Commonwealth Bank (PERLS V), which were classified as
Tier 1 capital. In light of the Court's reasons for judgment in that case, it is our view
that section 177EA should not apply to the Westpac Capital Notes.
2.
Disposals of Westpac Capital Notes
We expect the Commissioner of Taxation to take the view that the Westpac Capital Notes
are not 'traditional securities' for the purposes of the 1936 Act. On that basis, any gains or
losses made by Holders on the disposal of their Westpac Capital Notes will be taxed under
the CGT provisions.
A disposal of a Westpac Capital Note, whether by an on-market disposal, Redemption, or
pursuant to a Transfer Notice, will be a CGT event.
Investors may make a capital gain or a capital loss depending upon whether their capital
proceeds from the disposal are more than the cost base for their Westpac Capital Notes, or
whether the capital proceeds are less than the reduced cost base of their Westpac Capital
Notes, respectively.
For Investors who acquire Westpac Capital Notes pursuant to the Prospectus, the first
element of the cost base of a Westpac Capital Note to an Investor will be the amount paid
for the relevant Westpac Capital Note, which will be an amount equal to the Face Value of
the Westpac Capital Note. Other amounts associated with holding the Westpac Capital
Note, such as incidental costs of acquisition and disposal, may be added to the cost base.
The capital proceeds that will be received by an Investor from an on-market disposal of a
Westpac Capital Note will be the sale price of the Westpac Capital Note. The capital
proceeds from a Redemption or a Transfer of a Westpac Capital Note will be equal to the
Face Value of the Westpac Capital Note. Therefore, Investors who acquire their Westpac
Capital Notes pursuant to the Offer under the Prospectus should not make capital gains on
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Westpac Banking Corporation
TAXATION
LETTER
the Redemption or Transfer of their Westpac Capital Notes. However, Investors who sell
their Westpac Capital Notes on-market may make capital gains or capital losses on the
For personal use only
disposal of their Westpac Capital Notes.
Any capital gain (or capital loss) so derived (or incurred) by an Investor would be aggregated
with other capital gains and capital losses of the Investor in the relevant year of income to
determine whether the Investor has a net capital gain or net capital loss. A net capital gain,
if any, will be included in the Investor's assessable income and is subject to income tax,
however the 'CGT Discount' may be available to reduce the taxable gain for the Investor, as
described below. A net capital loss may not be deducted against other income for income
tax purposes, but may be carried forward to be offset against net capital gains realised in
later income years.
If an Investor is an individual, complying superannuation entity or a trust, and they held their
Westpac Capital Notes for 12 months or more before disposal, they would be entitled to a
'CGT Discount' for any capital gain made on the disposal. The CGT Discount entitles
Investors to reduce their capital gain on the disposal of a Westpac Capital Note (after
deducting available capital losses) by half, in the case of individuals and trusts, or by onethird, in the case of complying superannuation entities. However, trustees should seek
specific advice regarding the tax consequences of making distributions attributable to
discounted capital gains.
The 'CGT Discount' is not available to companies, nor can it apply to Westpac Capital Notes
disposed of by Investors under an agreement entered into within 12 months of the
acquisition of the Westpac Capital Notes by those Investors. Investors should seek
independent advice to determine if their Westpac Capital Notes have been held for the
requisite period.
3.
Conversion of Westpac Capital Notes
For each Westpac Capital Note that is Converted, an Investor's rights in relation to the
Westpac Capital Note will be terminated for an amount equal to the Face Value of the
Westpac Capital Note and Westpac will apply that amount for the Investor in subscribing
for Ordinary Shares which are to be issued by Westpac at a discount. The Conversion of a
Westpac Capital Note into an Ordinary Share in this way should not give rise to a capital
gain or a capital loss, nor an assessable revenue gain or a deductible revenue loss, for an
Investor. The recognition of any gain or loss that might otherwise have arisen on the
termination of a Westpac Capital Note is effectively deferred until any subsequent sale of
the Ordinary Shares acquired by the Investor from the Conversion.
The first element of the cost base or reduced cost base of each Ordinary Share acquired
as a result of the Conversion of a Westpac Capital Note will be the amount of the Investor's
cost base for the Converted Westpac Capital Notes.
The Ordinary Shares that will be acquired as a result of a Conversion of Westpac Capital
Notes are taken to have been acquired by Investors, for capital gains tax purposes,
including for the purpose of calculating the 12 month ownership period required for the
'CGT discount' (see above), at the time of Conversion.
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The capital proceeds that will be received by an Investor on a subsequent disposal of an
Ordinary Share on-market will be the sale price of the Ordinary Share.
Any capital gain (or capital loss) derived (or incurred) by an Investor will be aggregated with
other capital gains and capital losses of the Investor in the relevant year of income to
determine whether the Investor has a net capital gain or net capital loss. A net capital gain,
if any, will be included in the Investor's assessable income and is subject to income tax,
however the 'CGT Discount' may be available to reduce the taxable gain for the Investor, in
the same way as described above in relation to a disposal of Westpac Capital Notes. A net
capital loss may not be deducted against other income for income tax purposes, but may be
carried forward to be offset against net capital gains realised in later income years.
4.
Withholding Requirements
Westpac is required to deduct withholding tax from payments of any Distributions that may
be paid in respect of the Westpac Capital Notes and that are not 100% franked, at the rate
specified in the Taxation Administration Regulations 1976 (currently 46.5%), and remit such
amounts to the Australian Taxation Office, unless a Tax File Number or an Australian
Business Number has been quoted by an Investor, or a relevant exemption applies (and has
been notified to Westpac).
5.
Taxation of Financial Arrangements (TOFA) rules
The broad objective of the TOFA rules is to tax financial arrangements on an accruals or
marked-to-market basis and the rules are intended to apply to certain 'equity interests'
(section 230-50) in some circumstances. The Westpac Capital Notes are 'equity interests'
for Australian tax purposes.
The TOFA rules do not generally apply to individuals, superannuation entities or funds with
assets of less than $100 million and any other entities that have aggregated turnovers of
less than $100 million, financial assets of less than $100 million and total assets of less
than $300 million, except in certain limited circumstances where the relevant arrangement
would have been subject to accruals taxation in any event.
In addition, the TOFA provisions provide that the accruals, realisation, foreign exchange
retranslation and, generally, the hedging financial arrangements methods, do not apply to
gains or losses from a financial arrangement if the arrangement is an 'equity interest'.
Therefore, only the fair value or the financial reports method may apply, depending upon
an Investor's particular circumstances, to an investment in the Westpac Capital Notes.
Investors should seek their own taxation advice as to the potential application of the TOFA
rules to their investment in the Westpac Capital Notes in their particular circumstances.
6.
GST
No GST should be payable by an Investor in respect of acquiring Westpac Capital Notes or
on a sale, Conversion, Redemption or Transfer of Westpac Capital Notes.
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Westpac Banking Corporation
TAXATION
LETTER
7.
Stamp Duty
For personal use only
No stamp duty will be payable by an Investor on the acquisition, sale, Conversion,
Redemption or Transfer of Westpac Capital Notes, so long as the Westpac Capital Notes
and any Ordinary Shares issued to an Investor on Conversion are quoted on ASX (as the
Prospectus states is Westpac's intention) and no Investor (on an associate-inclusive basis)
will hold an interest (as respectively defined in the landholder stamp duty provisions of New
South Wales, Victoria, Queensland, South Australia, Western Australia and the Northern
Territory) of 90% or more in Westpac (including in Westpac's Ordinary Shares).
8.
Not financial product advice
The information contained in this opinion does not constitute financial product advice for
the purposes of the Corporations Act. The Allens partnership providing this opinion is not
licensed, under the Corporations Act, to provide financial product advice. To the extent
that this letter contains any information about a financial product within the meaning of the
Corporations Act, taxation is only one of the matters that must be considered when making
a decision about the relevant financial product. An Investor or prospective Investor should,
before making any decision to invest in the Westpac Capital Notes described above,
consider taking financial advice from a person who holds an Australian Financial Services
Licence under the Corporations Act.
Yours faithfully
ALLENS
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7
Summary of
important
documents
This Section summarises important documents.
It does not summarise the Westpac Capital Notes
Terms which are set out in full in Appendix B or
the Notes Deed Poll which can be obtained from
www.westpac.com.au/investorcentre.
Rights attaching to the Notes arise under the
Westpac Capital Notes Terms. Some of the rights
attaching to the Notes are linked with rights arising
under other documents.
For personal use only
SUMMARY OF
IMPORTANT
DOCUMENTS
Unless otherwise required by law, Westpac is not
required to recognise any interest in Ordinary Shares
apart from that of registered Ordinary Shareholders.
This Section sets out:
7.1 Overview of rights attaching to the Westpac
Capital Notes
7.2 Rights attaching to Ordinary Shares
7.3 Rights attaching to Approved Successor Shares
7.4 Summary of the Offer Management Agreement
This is only a summary of important documents
relating to the Offer. Westpac will provide a copy
of certain important documents free of charge to any
person who requests a copy during the Offer Period.
For a list of those documents and how to get a copy –
see Section 8.2.2.
7.1 Overview of rights
attaching to the
Westpac Capital Notes
Westpac is not required to register more than three
persons as joint holders of an Ordinary Share or issue
more than one share certificate or holding statement
for Ordinary Shares jointly held.
Restrictions apply in respect of persons who become
entitled to Ordinary Shares by reason of the death,
bankruptcy or mental incapacity of a holder of
Ordinary Shares.
7.2.2 Profits and dividends
Rights attaching to the Notes are contained in the
Westpac Capital Notes Terms.
Some of the rights attaching to the Notes are linked
with rights arising under other documents, for
example, Notes may be Converted into Ordinary
Shares in certain circumstances.
The rights attaching to Ordinary Shares are set out
in Westpac’s Constitution, the ASX Listing Rules and
the Corporations Act.
For a summary of important rights attaching to the
Ordinary Shares – see Section 7.2.
Holders of Ordinary Shares are entitled to receive
such dividends on Ordinary Shares as may be
declared by Westpac. Dividends determined by
Westpac are payable to holders of Ordinary Shares
in proportion to the amounts paid on the Ordinary
Shares that they hold.
Dividends must only be paid in accordance with
applicable laws and Westpac’s Constitution. Westpac
is restricted from paying dividends unless:
• Westpac’s assets exceed its liabilities immediately
before the dividend is declared and the excess is
sufficient for the payment of the dividend;
• the payment of the dividend is fair and reasonable
to Westpac’s shareholders as a whole; and
7.2Rights attaching
to Ordinary Shares
Ordinary Shares may be issued to Holders by
Westpac on Conversion. These Ordinary Shares will
be issued as fully paid and will rank equally with all
Ordinary Shares already on issue in all respects.
7.2.1Transfers
Transfers of Ordinary Shares are not effective until
registered. Subject to the ASX Listing Rules, Westpac
may refuse to register a transfer of Ordinary Shares
without giving any reasons. However, the ASX Listing
Rules substantially restrict when Westpac may refuse
to register a transfer.
88
Where two or more persons are registered as joint
holders of Ordinary Shares, they are taken to hold
the Ordinary Shares as joint tenants with rights
of survivorship.
• the payment of the dividend does not materially
prejudice Westpac’s ability to pay its creditors.
Additionally, dividends would not be payable
if making such a payment would breach or cause
a breach by Westpac of applicable capital adequacy
or other supervisory requirements of APRA, or if
Westpac was directed by APRA not to pay a dividend
under the Banking Act.
Dividends that are paid, but not claimed, may
be invested by the Westpac Directors for the benefit
of Westpac until required to be dealt with under any
law relating to unclaimed monies.
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7.2.3 Winding Up of Westpac
Subject to the preferential entitlement (if any) of
preference shareholders, holders of Ordinary Shares
are entitled to share equally in any surplus assets
if Westpac is wound up.
7.2.4 Meetings and voting rights
Ordinary Shareholders are entitled to receive
notice of, attend and vote at general meetings
of Westpac. Each Ordinary Shareholder present
at a general meeting (whether in person or by proxy
or representative) is entitled to one vote on a show
of hands or, on a poll, one vote for each Ordinary
Share held.
7.2.5 Issue of further Ordinary Shares
The Westpac Directors control the issue of Ordinary
Shares. Subject to the Corporations Act, the Westpac
Directors may issue further Ordinary Shares, and
grant options and pre‑emptive rights over Ordinary
Shares, on terms as they think fit.
7.3Rights attaching to
Approved Successor
Shares
If Westpac is replaced as the ultimate holding
company of the Westpac Group by an Approved
Successor, and the Westpac Capital Notes Terms
are amended to enable substitution of the Approved
Successor as debtor of the Westpac Capital Notes and
the issuer of ordinary shares on Conversion, Holders
will be issued with Approved Successor Shares on
Conversion (rather than Ordinary Shares). In order to
be classified as an Approved Successor, the shares
of the proposed successor holding company must be
listed on an internationally recognised stock exchange
– see clause 15.2 of the Westpac Capital Notes Terms
(definition of “Acquisition Event”). The Approved
Successor will be obliged to use all reasonable
endeavours to obtain quotation of the Approved
Successor Shares issued under the Westpac Capital
Notes Terms on the stock exchanges on which the
other Approved Successor Shares are quoted at the
time of a Conversion – see clause 12.4 of the Westpac
Capital Notes Terms.
7.4 Summary of the Offer
Management Agreement
Westpac and the Joint Lead Managers entered
into the Offer Management Agreement (“OMA”) on
30 January 2013. Under the OMA Westpac has
appointed Westpac Institutional Bank, ANZ Securities,
Commonwealth Bank of Australia, Deutsche Bank,
Macquarie Capital (Australia) Limited, Morgan Stanley
Australia Securities Limited and UBS as the Joint
Lead Managers and joint bookrunners for the Offer.
Under the OMA, the Joint Lead Managers agreed
to conduct the Bookbuild before the Opening Date
principally on the basis of the Original Prospectus.
In this process, Syndicate Brokers and Institutional
Investors were invited to lodge bids for a number of
Notes at various margins within an indicative margin
range. Using those bids, Westpac and the Joint Lead
Managers set the Margin and determined the firm
Allocations to Syndicate Brokers and Institutional
Investors. The Bookbuild was conducted on the terms
and conditions in the OMA.
The OMA contains various representations and
warranties, and imposes various obligations on
Westpac, including representations, warranties and
obligations to ensure that this Prospectus complies
with the Corporations and ASX Listing Rules, and to
conduct the Offer under the agreed timetable, ASX
Listing Rules, Prospectus and all other applicable
laws.
The OMA provides that Westpac will not, without
the Joint Lead Managers’ consent (not to be
unreasonably withheld or delayed), allot, agree to allot
or indicate in any way that it may or will allot or agree
to allot any hybrid or preference security with Tier 1
Capital status in the Australian retail market before
the Issue Date, other than pursuant to the Offer and in
certain other specified circumstances.
Westpac has agreed to indemnify the Joint Lead
Managers and parties affiliated with each against
damages, losses, costs, expenses and liabilities in
connection with the Offer, other than where these
result from any fraud, recklessness, wilful misconduct
or negligence of the indemnified parties.
SECTION 7 SUMMARY OF IMPORTANT DOCUMENTS
89
For personal use only
SUMMARY OF
IMPORTANT
DOCUMENTS
7.4.1 Settlement support
Each Joint Lead Manager agreed to provide
settlement support for the number of Notes Allocated
to Syndicate Brokers under the Bookbuild. Under
the OMA, as part of that settlement support, each
Joint Lead Manager will pay to Westpac, or procure
payment to Westpac of, the aggregate proceeds
raised from Syndicate Brokers under the Bookbuild
by the settlement date (7 March 2013). Each Joint
Lead Manager is only responsible for ensuring that
payment is made for Notes Allocated to them or at
their direction, and for an equal share (with all other
Joint Lead Managers excluding Westpac Institutional
Bank) of any Third Party Broker Amount. Westpac
Institutional Bank need only pay, or procure payment,
to Westpac of the proportion of its JLM Broker Firm
Amount and the Institutional Amount that it actually
receives from third party investors.
7.4.2Fees
Under the OMA, Westpac will pay:
• Deutsche Bank:
–– a structuring fee of up to $1,000,000; and
–– a selling fee of 1.00% of the Third Party Broker
Firm Amount.
Deutsche Bank is responsible for paying all fees
payable to any Third Party Brokers;
• each Joint Lead Manager, a selling fee of 1.00%
of that Joint Lead Manager’s JLM Broker Firm
Amount for which it has obtained payment
(provided that Westpac Institutional Bank will only
receive this fee in respect of the portion of its
JLM Broker Firm Amount which is not allocated in
respect of Institutional Investors);
• each Joint Lead Manager whose JLM Broker Firm
Amount equals or exceeds a minimum threshold,
a bookrunning fee of:
–– 0.50% of the proceeds raised from that Joint
Lead Manager’s JLM Broker Firm Amount
through the Bookbuild; and
–– an equal share (with all other Joint Lead
Managers whose JLM Broker Firm Amount
is equal to or exceeds a minimum threshold)
of 0.50% of the Third Party Broker Firm
Amount; and
90
• Westpac Institutional Bank as Joint Lead Manager
a selling fee of 0.25% of the proceeds raised from
Institutional Investors through the Bookbuild for
which it has obtained payment.
The Joint Lead Managers are responsible for paying
all selling fees and other commissions payable to
brokers or other persons in connection with the Offer.
7.4.3Termination
Any/each Joint Lead Manager may terminate its
obligations under the OMA on the occurrence of a
number of customary termination events, including
(among others):
• a credit rating downgrade of Westpac;
• a specified fall in the All Ordinaries Index of ASX
or the S&P/ASX 200;
• ASIC issues a stop order in relation to the Offer;
• a supplementary prospectus is required under
section 719 of the Corporations Act;
• ASX refuses to quote the Notes on ASX;
• any person (other than a Joint Lead Manager)
withdraws their consent to be named in the
Prospectus;
• certain breaches of the OMA;
• Westpac withdraws the Prospectus or the Offer;
• trading of Ordinary Shares, Westpac TPS,
Westpac SPS, Westpac SPS II, Westpac CPS or
Westpac Subordinated Notes 2012 is suspended
for a certain period of time, or Ordinary Shares,
Westpac TPS, Westpac SPS, Westpac SPS II,
Westpac CPS or Westpac Subordinated Notes
2012 cease to be quoted on ASX;
• unauthorised alterations to Westpac’s share
capital or Westpac’s Constitution; and
• an adverse change in the financial position
or prospects of the Westpac Group.
Certain termination events will only give rise
to a right to terminate if the Joint Lead Manager
reasonably believes that the event has or is likely
to have a material adverse effect on the Offer. If
termination occurs, the Joint Lead Manager who
terminates (or each Joint Lead Manager) will no
longer be a lead manager or bookrunner and will
not be obliged to conduct the Bookbuild or provide
settlement support for the Bookbuild.
PROSPECTUS
For personal use only
Under the OMA, if one Joint Lead Manager
terminates, each other Joint Lead Manager must
give notice in writing to Westpac and each of the
terminating Joint Lead Managers stating whether
it will also terminate or whether it will assume the
obligations of the terminating Joint Lead Manager(s).
SECTION 7 SUMMARY OF IMPORTANT DOCUMENTS
91
For personal use only
8
Additional
Information
You should be aware of a number of other
matters that may not have been addressed
in detail elsewhere in this Prospectus.
These include the availability of certain relevant
documents for inspection, the consents of advisers
and others whose statements have been included in
this Prospectus and the concessions that regulators
have granted to Westpac in respect of the Offer.
For personal use only
This Section sets out:
8.1 Restrictions on ownership for Westpac
8.2 Information, disclosure and availability
8.3 Consents
8.4 Interests of advisers
8.5 Interests of Westpac Directors
8.6 Westpac legal proceedings
8.7 ASIC relief
8.8 ASX waivers and approvals
8.9 Foreign selling restrictions
8.10 Acknowledgement and privacy statement
8.11 Governing law
Copies of these documents and other documents
lodged with ASIC by Westpac may be obtained from,
or inspected at, an ASIC office.
Westpac also has an obligation under the ASX Listing
Rules to notify ASX immediately of any information
concerning Westpac of which it becomes aware and
which a reasonable person would expect to have
a material effect on the price or value of Westpac’s
securities unless exceptions from disclosure apply
under ASX Listing Rules. ASX maintains records
of company announcements for all companies listed
on ASX. Westpac’s announcements may be viewed
on ASX’s website (www.asx.com.au).
8.1Restrictions on
ownership for Westpac
8.2.2 Accessing information about
Westpac
The Financial Sector (Shareholdings) Act 1988 (Cth)
restricts the aggregate voting power of a person
and their associates in an Australian bank to 15%.
A shareholder may apply to the Treasurer of the
Commonwealth of Australia to extend its stake beyond
15%, however approval cannot be granted unless the
Treasurer is satisfied that it is in the national interest
to approve a holding of greater than 15%.
Westpac will provide a copy of any of the
following documents free of charge to any person
who requests a copy during the Offer Period in
relation to this Prospectus:
Acquisitions of interests in shares in Australian
companies by foreign persons are subject to review
and approval by the Treasurer of the Commonwealth
of Australia under the Foreign Acquisitions and
Takeovers Act 1975 (Cth) in certain circumstances.
Potential investors should consult their professional
advisers to determine whether the Foreign
Acquisitions and Takeovers Act 1975 (Cth) may
affect their holding or ownership of Notes or Ordinary
Shares.
• the financial statements of Westpac for the year
ended 30 September 2012 (being the most recent
annual financial statements lodged with ASIC
before the lodgement of this Prospectus);
• the interim financial report of Westpac for the half
year ended 31 March 2012 (being the most recent
interim financial statements lodged with ASIC
before the lodgement of this Prospectus);
• any document or financial statement lodged by
Westpac with ASIC or ASX under the continuous
disclosure reporting requirements in the period
after the lodgement of the annual financial
statements and before the lodgement of the
Prospectus; and
• Westpac’s Constitution.
8.2 Information, disclosure
and availability
Copies of the above documents may be obtained
in person or in writing from Westpac at:
8.2.1 Reporting and disclosure obligations
Westpac Group Secretariat
Level 20
275 Kent Street
Sydney NSW 2000
Westpac is a disclosing entity for the purposes of the
Corporations Act and is subject to regular reporting
and disclosure obligations under the Corporations Act
and the ASX Listing Rules. These obligations require
that Westpac prepare both yearly and half-yearly
financial statements and a report on the operations
of Westpac during the relevant accounting period
together with an audit or review report by its auditor.
SECTION 8 ADDITIONAL Information
93
For personal use only
Important
Information
8.3Consents
Each Westpac Director has given, and not withdrawn,
their consent to the lodgement of this Prospectus
with ASIC.
Each of the parties (referred to as “Consenting
Parties”), who are named below:
1. has not made any statement in this Prospectus
or any statement on which a statement made in
this Prospectus is based, other than as specified
in point 4 below;
2. to the maximum extent permitted by law, expressly
disclaims and takes no responsibility for any
94
statements or omissions from this Prospectus,
other than the reference to its name and/or
statement or report included in this Prospectus
with the consent of that Consenting Party;
3. has given and has not, before the lodgement of
this Prospectus with ASIC, withdrawn its written
consent to be named in this Prospectus in the
form and context in which it is named; and
4. in the case of Allens, has given and has not,
before the lodgement of this Prospectus with
ASIC, withdrawn its written consent to the
inclusion of the Taxation Letter in the form and
context in which it appears in this Prospectus.
Role
Consenting Parties
Structuring Adviser
Deutsche Bank
Joint Lead Managers
Westpac Institutional Bank
ANZ Securities
Commonwealth Bank of Australia
Deutsche Bank
Macquarie Capital (Australia) Limited
Morgan Stanley Australia Securities Limited
UBS
Legal and tax adviser to the Offer
Allens
Auditor
PricewaterhouseCoopers
Accounting adviser
PricewaterhouseCoopers Securities Ltd
Registry
Link Market Services Limited
Online Manager
Westpac Online Investing acting through Westpac
Securities Limited
PROSPECTUS
For personal use only
8.4 Interests of advisers
Deutsche Bank has acted as structuring adviser
and a Joint Lead Manager, in respect of which it
will receive the fees set out in Section 7.4.2. The
remaining Joint Lead Managers will receive fees,
as also set out in Section 7.4.2.
Allens has acted as legal and tax adviser to Westpac
in relation to the Offer and has performed work in
relation to preparing the due diligence and verification
program, performed due diligence required on
legal and taxation matters, and has prepared the
Taxation Letter included in Section 6. In respect of
this work, Westpac estimates that it will pay to Allens
approximately $500,000 (excluding disbursements and
GST). Further amounts in relation to the Offer may
be paid to Allens under its normal time‑based charges.
PricewaterhouseCoopers Securities Ltd has acted as
the accounting adviser to Westpac. Westpac estimates
that it will pay approximately $80,000 (excluding
disbursements and GST) to PricewaterhouseCoopers
Securities Ltd. Further amounts in relation to the Offer
may be paid to PricewaterhouseCoopers Securities
Ltd under its normal time-based charges.
Other than as set out in this Prospectus:
• no person named in this Prospectus as performing
a function in a professional, advisory or other
capacity in connection with the preparation
or distribution of this Prospectus; and
• no promoter or underwriter of the Offer or financial
services licensee named in this Prospectus as a
financial services licensee involved in the Offer,
holds at the date of this Prospectus, or has held
in the two years before that date, an interest in:
• the formation or promotion of Westpac;
• the Offer; or
• any property acquired or proposed to be acquired
by Westpac in connection with its formation or
promotion or with the Offer.
Other than as set out in this Prospectus, no
such person has been paid or agreed to be paid
any amount, nor has any benefit been given or
agreed to be given to any such persons for services
provided by them, in connection with the formation
or promotion of Westpac or with the Offer.
8.5 Interests of Westpac
Directors
The Westpac Directors’ interests in Ordinary Shares as
at 5 February 2013 are detailed in the following table:
Westpac Director
Ordinary Shares
Lindsay Maxsted
16,344
Gail Kelly
1,648,371
John Curtis
35,787
Elizabeth Bryan
24,539
Gordon Cairns
17,038
Robert Elstone
10,000
Peter Hawkins
15,218
Ann Pickard1
9,800
Ewen Crouch
34,249
The Westpac Directors and their associates may
acquire Notes offered under this Prospectus subject
to the ASX Listing Rules, including any waivers
described in Section 8.8.
Other than as set out above, no Westpac Director
holds, at the date of this Prospectus, or has held
in the two years before that date, an interest in:
• the formation or promotion of Westpac;
• the Offer; or
• any property acquired or proposed to be acquired
by Westpac in connection with its formation or
promotion or with the Offer.
No Westpac Director has been paid or agreed to
be paid any amount (whether in cash or in shares or
otherwise), nor has any benefit been given or agreed
to be given to any Westpac Director to induce them
to become or qualify them as a Westpac Director, or
for services provided by them in connection with the
formation or promotion of Westpac or with the Offer.
Note:
1. Ann Pickard’s interests arise through holding 1,960 Westpac American Depositary Shares (ADS). One ADS is comprised of five Ordinary Shares.
SECTION 8 ADDITIONAL Information
95
For personal use only
Important
Information
8.6 Westpac legal
proceedings
Contingent liabilities exist in respect of actual and
potential claims and proceedings. An assessment
of Westpac’s likely loss has been made on a
case‑by-case basis for the purposes of Westpac’s
30 September 2012 financial statements and specific
provisions have been made where appropriate.
8.7 ASIC relief
The distribution of this Prospectus (including an
electronic copy) in jurisdictions outside Australia
may be restricted by law. If you come into possession
of this Prospectus in jurisdictions outside Australia,
then you should seek advice on, and observe,
any such restrictions. If you fail to comply with
such restrictions, that failure may constitute
a violation of applicable securities laws.
8.8 ASX waivers and
approvals
ASX has confirmed that:
• Listing Rule 10.11 has been waived to the extent
necessary to permit the Westpac Directors and
their associates to participate in the Offer and be
issued Notes without shareholder approval on the
following conditions:
–– the number of Notes which may be issued
to Westpac Directors and their associates
collectively is no more than 0.2% of the total
number of Notes issued under the Offer, and
the participation of the Westpac Directors and
their associates in the Offer is on the same
terms and conditions as applicable to other
subscribers for Notes;
–– Westpac releases the terms of the waiver to
the market when the Offer is announced; and
–– when the Notes are issued, Westpac
announces to the market the total number of
Notes issued to the Westpac Directors and
their associates in aggregate;
• the Westpac Capital Notes Terms are appropriate
and equitable for the purposes of Listing Rule 6.1;
96
8.9Foreign selling
restrictions
8.9.1 Other foreign jurisdictions
ASIC relief has been obtained to enable Westpac
to issue a “transaction-specific” prospectus which
complies with section 713 of the Corporations Act
in relation to the Offer.
• the divestment of Notes from Holders, to the
extent that such divestment occurs as a result
of a Conversion, Redemption or Transfer as
set out in the Westpac Capital Notes Terms,
is appropriate and equitable for the purposes of
Listing Rule 6.12; and
• for the purposes of Listing Rule 7.1B.1, ASX
does not object to Westpac, for the purposes
of calculating the number of Notes that may be
issued without prior shareholder approval, notionally
Converting the Notes into Ordinary Shares based on
the market price of Ordinary Shares on the trading
day prior to the date of this Prospectus.
This Prospectus does not constitute an offer in
any jurisdiction in which, or to any person to whom,
it would not be lawful to make such an offer. No action
has been taken to register or qualify Notes or the
Offer or to otherwise permit a public offering of Notes
in any jurisdiction outside Australia.
8.9.2 United States
The Notes have not been and will not be registered
under the US Securities Act or the securities laws
of any state of the United States and may not be
offered, sold, delivered or transferred in the United
States or to, or for the account or benefit of, any US
Person. Neither this Prospectus nor any Application
Form or other materials relating to the Offer may be
distributed in the United States.
Each of the Joint Lead Managers has agreed that it
will not offer, sell, deliver or transfer the Notes (i) as
part of their distribution at anytime or (ii) otherwise
until 40 days after the later of the commencement
of the Offer and Issue Date (the “Distribution
Compliance Period”), within the United States or
to, or for the account or benefit of, US Persons, and
it will have sent to each dealer, distributor or other
relevant parties to which Notes are allocated during
the Distribution Compliance Period a confirmation
PROSPECTUS
For personal use only
or other notice setting forth the restrictions on offers,
sales, deliveries and transfers of the Notes within the
United States or to, or for the account or benefit of,
US Persons.
as a Holder (and following Conversion, if applicable,
your holding of Ordinary Shares), provide facilities
and services that Applicants request, and carry out
appropriate administration.
In addition, until 40 days after the commencement of
the Offer, an offer or sale of Notes within the United
States by a dealer that is not participating in the Offer
may violate the registration requirements of the US
Securities Act.
Company and tax laws require some of the
information to be collected. If you do not provide the
information requested, your Application may not be
able to be processed efficiently, if at all.
Each of the Joint Lead Managers has agreed that
(i) neither it, its affiliates nor any persons acting on
its or their behalf have engaged or will engage in any
directed selling efforts within the meaning of Rule
902 under the US Securities Act with respect to the
Notes, and it and they have complied with and will
comply with the offering restrictions requirement
of Regulation S under the US Securities Act and
(ii) it has not entered into and, without Westpac’s
prior consent, will not enter into, any contractual
arrangement with respect to the distribution or
delivery of the Notes, except with its affiliates.
8.9.3 New Zealand
This Prospectus has not been and will not be
registered in New Zealand. Notes may not be offered
or sold directly or indirectly in New Zealand, other
than:
• to persons whose principal business is the
investment of money;
• to persons who in the course of and for the
purposes of their business habitually invest
money; or
• in any other circumstance which does not constitute
an offer to the public within the meaning of section
3(2) of the Securities Act 1978 (New Zealand).
8.10 AcknowledgEment and
privacy statement
By completing and submitting an Application Form
or making an online Application you acknowledge
that you have read this Prospectus.
Access to the information may be provided to
the Westpac Group and to Westpac’s agents and
service providers on the basis that they deal with
such information in accordance with Westpac’s
privacy policy. Access to the information may also
be provided by Westpac to domestic and overseas
regulators or other government agencies (including
ASIC and the Australian Tax Office), or provided as
required or allowed by any law relating to taxation,
money laundering or counter-terrorism.
By submitting an Application Form or an online
Application, you consent to your information being
disclosed to the persons described above, in the
manner set out in this Section 8.10.
Under the Privacy Act 1988 (Cth), an Applicant may
request access to their personal information held by
(or on behalf of) Westpac. An Applicant can request
access to their personal information by telephoning
or writing to the privacy officer of the Registry.
More information about the way Westpac handles
personal information is in the Westpac privacy
policy, a copy of which can be obtained by visiting
www.westpac.com.au.
8.11Governing law
This Prospectus and the contracts that arise from the
acceptance of Applications are governed by the law
applicable in New South Wales, Australia and each
Applicant submits to the exclusive jurisdiction of the
courts of New South Wales, Australia.
Applicants will be asked to provide personal
information to Westpac (directly or via the Registry).
Westpac (and the Registry on its behalf) collects,
holds and uses that personal information in order
to process your Application, service your needs
SECTION 8 ADDITIONAL Information
97
For personal use only
A
APPENDIX A
Glossary
The following is a glossary of terms used
in this Prospectus. There is also a list
of defined terms in clause 15.2 of the
Westpac Capital Notes Terms.
For personal use only
Defined terms in this glossary and in clause 15.2 of the Westpac Capital Notes Terms are used throughout this
Prospectus and the attached, or accompanying, Application Forms.
ABN
Australian Business Number
Acquisition Event
occurs when:
• a takeover bid is made and certain conditions are satisfied; or
• a scheme of arrangements is proposed and approved and certain
conditions are satisfied
An Acquisition Event does not occur upon the proposed replacement of
Westpac as the ultimate holding company of the Westpac Group if certain
conditions are met
Acquisition Event
Conversion Date
has the meaning set out in clause 5.7(a)(iii) of the Westpac Capital Notes
Terms
Additional Tier 1 Capital
Additional Tier 1 Capital as described by APRA
ADI
authorised deposit-taking institution
Administrative Action
any judicial decision, official administrative pronouncement or action,
published or private ruling, interpretative decision, regulatory procedure
or policy, application of a regulatory procedure or policy and any notice or
announcement (including any notice or announcement of intent to adopt or
make any of these things)
AFSL
Australian Financial Services Licence
Allocation
the number of Notes allocated under the Offer to:
• Eligible Securityholders at the end of the Offer Period; and
• Syndicate Brokers and Institutional Investors under the Bookbuild
Allocate and Allocated have the corresponding meanings
Allotment
the issue of Notes to Applicants on the Issue Date under their Allocation
Allotted and Allot have the corresponding meanings
ANZ Securities
ANZ Securities Limited (ABN 16 004 997 111)
Applicant
a person who submits an Application in accordance with the Prospectus
Application
a valid application made under this Prospectus by using the relevant
Application Form to apply for a specified number of Notes
Application Form or
Application Forms
the application form (the Securityholder Application Form or the Broker Firm
Application Form) attached to or accompanying this Prospectus, or an online
version of the Application Form, upon which an Application may be made
Application Payment
the monies payable on Application, calculated as the number of Notes
applied for multiplied by the Face Value
APPENDIX A Glossary
99
For personal use only
Appendix A
Glossary
APRA
Australian Prudential Regulation Authority
Approved Successor
a holding company that replaces, or is proposed to replace, Westpac as
the ultimate holding company of the Westpac Group and that satisfies the
requirements under paragraphs (c) to (h) of the definition of “Acquisition
Event” in clause 15.2 of the Westpac Capital Notes Terms
Approved Successor
Share
a fully paid ordinary share in the capital of the Approved Successor
ASIC
Australian Securities and Investments Commission
ASTC
ASX Settlement Pty Limited (ABN 49 008 504 532)
ASX
ASX Limited (ABN 98 008 624 691) or the financial market operated by ASX
Limited, as the context requires
ASX Listing Rules or
Listing Rules
the listing rules of ASX with any modification or waivers which ASX may
grant to Westpac
ASX Market Rules
the operating rules of ASX from time to time
Bank Bill Rate
has the meaning given in clause 3.1 of the Westpac Capital Notes Terms
Banking Act
the Banking Act 1959 (Cth)
BCBS
Basel Committee on Banking Supervision
Bookbuild
the process conducted by the Joint Lead Managers as agents for Westpac to
determine the Margin and firm Allocations of the Notes to certain Syndicate
Brokers and Institutional Investors
Broker Firm Applicant
an Australian resident retail client of a Syndicate Broker who applies for a
broker firm Allocation from a Syndicate Broker under the Broker Firm Offer
Broker Firm Application
Form
the Application Form attached to or accompanying this Prospectus upon
which a Broker Firm Applicant can make an Application
Broker Firm Offer
the invitation made to Australian resident retail clients of the Syndicate
Brokers to apply for a broker firm Allocation from the relevant Syndicate
Broker under this Prospectus
Business Day
a business day as defined in the ASX Listing Rules
Buy Back
a transaction involving the acquisition by Westpac of its Ordinary Shares
pursuant to the provisions of Part 2J of the Corporations Act
Capital Reduction
a reduction in capital by Westpac of its Ordinary Shares in any way permitted
by the provisions of Part 2J of the Corporations Act
100
Prospectus
For personal use only
Capital Securities
Ordinary Shares or any equity, hybrid or subordinated debt capital security
(whether comprised of one or more instruments) issued by Westpac
excluding the Notes
Capital Trigger Event
occurs when:
• Westpac determines; or
• APRA notifies Westpac in writing that it believes,
that either or both the Westpac Level 1 Common Equity Tier 1 Capital Ratio
or Westpac Level 2 Common Equity Tier 1 Capital Ratio (each as defined
in the Westpac Capital Notes Terms) is equal to or less than 5.125%
Capital Trigger Event
Conversion Date
has the meaning set out in clause 5.1(d)(iii) of the Westpac Capital Notes
Terms
CHESS
Clearing House Electronic Subregister System operated by ASTC
Closing Date
the last day on which Applications will be accepted, expected to be:1
• 5.00pm Sydney time on 1 March 2013 for the Securityholder Offer; and
• 10.00am Sydney time on 7 March 2013 for the Broker Firm Offer
Common Equity Tier 1
Capital
Common Equity Tier 1 Capital as described by APRA from time to time
Common Equity Tier 1
Capital Ratio
Common Equity Tier 1 Capital ratio as described by APRA from time to time
Commonwealth Bank
of Australia
Commonwealth Bank of Australia (ABN 48 123 123 124)
Consenting Party
each of the consenting parties named in Section 8.3
Conversion
the conversion of all, some or a proportion of each Note into Ordinary
Shares under the Westpac Capital Notes Terms
Convert, Converted and Convertible have the corresponding meaning
Conversion Date
the applicable:
• Scheduled Conversion Date;
• Capital Trigger Event Conversion Date;
• Non-Viability Trigger Event Conversion Date; or
• Acquisition Event Conversion Date
Conversion Number
has the meaning given in clause 8.1 of the Westpac Capital Notes Terms
Corporations Act
Corporations Act 2001 (Cth)
Deutsche Bank
Deutsche Bank AG, Sydney Branch (ABN 13 064 165 162)
Note:
1. Westpac and the Joint Lead Managers may, in their absolute discretion, close the Offer early or extend the Offer Period without notice. Westpac may also withdraw the Offer
at any time before Westpac Capital Notes are issued.
APPENDIX A Glossary
101
For personal use only
Appendix A
Glossary
Distribution
interest on the Face Value of each Note as set out in clause 3.1 of the
Westpac Capital Notes Terms
Distribution Payment
Conditions
the conditions set out in clause 3.3 of the Westpac Capital Notes Terms,
being:
• Westpac’s absolute discretion;
• the payment of the Distribution not resulting in a breach of Westpac’s
capital requirements under APRA’s prudential standards as they are
applied to the Westpac Group at the time of the payment;
• the payment of the Distribution not resulting in Westpac becoming, or
being likely to become, insolvent for the purposes of the Corporations
Act; and
• APRA not otherwise objecting to the payment of the Distribution
Distribution Payment
Date
has the meaning given in clause 3.5 of the Westpac Capital Notes Terms
Distribution Period
the period from (but excluding) the Issue Date until (and including) the
first Distribution Payment Date or thereafter from (but excluding) each
Distribution Payment Date until (and including) the next Distribution
Payment Date
Distribution Rate
has the meaning given in clause 3.1 of the Westpac Capital Notes Terms
Dividend
any interim, final or special dividends payable in accordance with the
Corporations Act and Westpac’s Constitution in relation to Ordinary Shares
Eligible Securityholder
a registered holder of Ordinary Shares, Westpac TPS, Westpac SPS,
Westpac SPS II, Westpac CPS and/or Westpac Subordinated Notes 2012 at
7.00pm Sydney time on 21 January 2013 and shown on the Register to have
an address in Australia
Equal Ranking Capital
Securities
has the meaning given in clause 15.2 of the Westpac Capital Notes Terms
Exposure Period
the 7 day period commencing on the day after the Original Prospectus was
lodged with ASIC
Face Value or
Issue Price
the issue price for the Notes, being $100 per Note
FATCA
sections 1471 through 1474 of the United States Internal Revenue Code
of 1986, as amended (or any consolidation, amendment, re-enactment
or replacement of those provisions and including any regulations or official
interpretations issued, agreements entered into or non-US laws enacted
with respect to those provisions)
Financial Claims
Scheme
the financial claims scheme established under the Banking Act
102
Prospectus
For personal use only
First Scheduled
Conversion Condition
the VWAP on the 25th Business Day on which trading in Ordinary
Shares took place immediately preceding (but not including) the Scheduled
Conversion Date is greater than 56.12% of the Issue Date VWAP, as set
out in clause 4.2(a)(i) of the Westpac Capital Notes Terms
Franking Event
occurs if Westpac determines that as a result of a change or proposed
change in, or amendment or proposed amendment to, the laws of Australia
or their application (including as a result of a court decision) which was
not expected by Westpac at the Issue Date and has or is expected to
become effective on or after the Issue Date there is a material risk that
any Distribution would not be a frankable distribution within the meaning
of Division 202 of the Tax Act
Franking Rate
the percentage of Distribution that would carry franking credits (within
the meaning of Part 3-6 of the Tax Act or any provisions that revise or
replace that Part), applicable to the relevant Distribution entitlement on that
Distribution Payment Date
GST
Goods and Services Tax
HIN
holder identification number
Holder
a registered holder of Notes
Holding Statement
a statement issued to Holders by the Registry which sets out details of Notes
allotted to them under the Offer
Institutional Amount
the Allocation to Institutional Investors multiplied by the Face Value
Institutional Investor
an investor to whom offers of securities can be made without the need
for a Prospectus (or other formality, other than a formality which Westpac
is willing to comply with), including in Australia persons to whom offers of
securities can be made without the need for a lodged Prospectus under
Chapter 6D of the Corporations Act
Institutional Offer
the invitation by Westpac Institutional Bank to Institutional Investors to bid
for Notes in the Bookbuild
Issue Date
the date on which the Notes are issued, expected to be 8 March 2013
Issue Date VWAP
the VWAP during the period of 20 Business Days on which trading in
Ordinary Shares took place immediately preceding but not including
the Issue Date, as adjusted in accordance with clauses 8.4 to 8.7 of the
Westpac Capital Notes Terms
JLM Broker Firm
Amount
for each Joint Lead Manager, the Face Value multiplied by the Allocation
to that Joint Lead Manager
APPENDIX A Glossary
103
For personal use only
Appendix A
Glossary
Joint Lead Managers
Westpac Institutional Bank, ANZ Securities, Commonwealth Bank of
Australia, Deutsche Bank, Macquarie Capital (Australia) Limited, Morgan
Stanley Australia Securities Limited and UBS
Level 1 and Level 2
those terms as defined by APRA from time to time
Liquidation Sum
an amount of surplus assets equal to $100 per Westpac Capital Note
(as adjusted for any write-off or Conversion under clauses 5.1 or 5.2 of the
Westpac Capital Notes Terms)
Macquarie Capital
(Australia) Limited
Macquarie Capital (Australia) Limited (ABN 79 123 199 548)
Margin
3.20% per annum
Maximum Conversion
Number
has the meaning given in clause 8.1 of the Westpac Capital Notes Terms
Morgan Stanley
Australia Securities
Limited
Morgan Stanley Australia Securities Limited (ABN 55 078 652 276)
Nominated Party
one or more third parties selected by Westpac in its absolute discretion
(which cannot include a member of the Westpac Group)
Non-Viability Trigger
Event
occurs when APRA notifies Westpac in writing that it believes:
• Conversion of all or some of the Notes, or conversion or write down of
capital instruments of the Westpac Group, is necessary because, without
it, Westpac would become non-viable; or
• a public sector injection of capital, or equivalent support, is necessary
because, without it, Westpac would become non-viable
Non-Viability Trigger
Event Conversion Date
has the meaning set out in clause 5.2(c)(iii) of the Westpac Capital Notes
Terms
Notes Deed Poll
the Notes Deed Poll in relation to the Notes
Offer
the offer of the Notes under this Prospectus at a Face Value of $100 each to
raise approximately $1.25 billion with the ability to raise more or less
Offer Period
the period from the Opening Date to the Closing Date1
OMA or Offer
Management Agreement
the Offer Management Agreement entered into between Westpac and the
Joint Lead Managers as summarised in Section 7.4
Note:
1. Westpac and the Joint Lead Managers may, in their absolute discretion, close the Offer early or extend the Offer Period without notice. Westpac may also withdraw the Offer
at any time before Westpac Capital Notes are issued.
104
Prospectus
For personal use only
Online Manager
Westpac Online Investing acting through Westpac Securities Limited
(ABN 39 087 924 221, AFSL 233 723), a service provided by Australian
Investment Exchange Ltd (ABN 71 076 515 930, AFSL 241 400), a
participant of ASX
Opening Date
the day the Offer opens, being 7 February 2013
Optional Redemption/
Transfer Date
8 March 2019
Ordinary Share
a fully paid ordinary share in the capital of Westpac
Original Prospectus
the prospectus dated 30 January 2013 and lodged with ASIC on that date,
which this Prospectus replaces
Prospectus
this document (including the electronic form of this Prospectus), and any
supplementary or replacement Prospectus in relation to the Offer
Record Date
in the case of:
• the payment of Distributions, the date which is eight calendar days
before the relevant Distribution Payment Date or, if that date does not
fall on a Business Day, the immediately preceding Business Day (or such
other date as may be prescribed under the ASX Listing Rules or, if not
prescribed by the ASX Listing Rules, a date determined by Westpac
and notified to ASX); and
• the payment of the Face Value of the Note upon a Redemption or
Transfer, a date determined by Westpac and notified to ASX (or such
other date as may be prescribed by ASX)
Redemption
the redemption of all or some of the Notes for their Face Value under the
Westpac Capital Notes Terms
Redeem, Redeemable and Redeemed have corresponding meanings
Redemption Date
in respect of each Note, the date specified by Westpac as the Redemption
Date in accordance with clause 6 of the Westpac Capital Notes Terms
Register
the official register of Ordinary Shares, Westpac Capital Notes (if issued),
Westpac SPS, Westpac SPS II, Westpac CPS or Westpac Subordinated
Notes 2012 maintained by Westpac, or the official register of Westpac
TPS, maintained by the Registry on the issuer’s behalf, and includes
any sub‑register established and maintained under CHESS
Registry
Link Market Services Limited (ABN 54 083 214 537) or any other registry
that Westpac appoints to maintain a register of its securities
APPENDIX A Glossary
105
For personal use only
Appendix A
Glossary
Regulatory Event
will occur if:
• as a result of an amendment to, clarification of or change or prospective
change of Australian law or regulations or an Administrative Action
that was not expected by Westpac as at the Issue Date, additional
requirements would be imposed on the Westpac Group in relation to the
Notes, or there would be a negative impact on the Westpac Group which
Westpac determines, at its sole discretion, to be unacceptable; or
• Westpac determines that all, some or a proportion of all or some Notes
are not or will not be treated as Additional Tier 1 Capital of the Westpac
Group under APRA’s prudential standards (as amended from time
to time), other than as a result of a change of treatment expected by
Westpac as at the Issue Date
Risk Weighted Assets
risk weighted assets as defined by APRA
Scheduled Conversion
Conversion on the Scheduled Conversion Date
Scheduled Conversion
Conditions
the First Scheduled Conversion Condition and the Second Scheduled
Conversion Condition
Scheduled Conversion
Date
the date that is the earlier of:
• 8 March 2021; and
• the first Distribution Payment Date after 8 March 2021,
on which the Scheduled Conversion Conditions are satisfied
Second Scheduled
Conversion Condition
the VWAP during the period of 20 Business Days on which trading
in Ordinary Shares took place immediately preceding (but not including)
the Scheduled Conversion Date is greater than 50.51% of the Issue Date
VWAP, as set out in clause 4.2(a)(ii) of the Westpac Capital Notes Terms
except that the Second Conversion Condition applies to a Conversion
following an Acquisition Event as though the proposed Acquisition Event
Conversion Date were a Scheduled Conversion Date for the purposes of
clause 4 of the Westpac Capital Notes Terms and the reference to 50.51%
is a reference to 20.20% of the Issue Date VWAP
Securityholder
Application Form
the Application Form accompanying this Prospectus (or an online version of
such a form) upon which an Eligible Securityholder can make an Application
Securityholder Offer
the invitation to Eligible Securityholders to apply for Notes under this
Prospectus
Senior Creditors
all creditors of Westpac (present and future), including depositors of
Westpac and all holders of Westpac’s senior or subordinated debt whose
claims are not made as holders of indebtedness arising under Capital
Securities that rank equally with or behind the Notes and whose claims are
admitted in the Winding Up
106
Prospectus
For personal use only
Solvent Reconstruction
a scheme of amalgamation or reconstruction, not involving a bankruptcy
or insolvency, where the obligations of Westpac in relation to the outstanding
Notes are assumed by the successor entity to which all, or substantially all
of the property, assets and undertaking of Westpac are transferred or where
an arrangement with similar effect not involving a bankruptcy or insolvency
is implemented
Special Resolution
• a resolution passed at a meeting of Holders by a majority of least 75%
of the votes validly cast by Holders in person or by proxy and entitled
to vote on the resolution; or
• the written approval of Holders holding at least 75% of the Notes
SRN
securityholder reference number
Sydney time
time in Sydney, New South Wales, Australia
Syndicate Broker
any of the Joint Lead Managers (or their affiliated retail brokers) or Third
Party Brokers and any other participating broker in the Offer
Tax Act
the Income Tax Assessment Act 1936 (Cth) or the Income Tax Assessment
Act 1997 (Cth) (as the case may be, both as amended from time to time,
and a reference to a section of the Income Tax Assessment Act 1936 (Cth)
includes a reference to that section as rewritten in the Income Tax
Assessment Act 1997 (Cth)) and any other law setting the rate of income tax
payable or regulation made under such laws
Tax Event
occurs when Westpac determines that there is a material risk that the
Westpac Group would be exposed to a more than de minimis adverse tax
consequence or increased cost in relation to the Notes other than a tax
consequence or cost that Westpac expected at the Issue Date
Tax Rate
the Australian corporate tax rate applicable to the franking account
of Westpac at the relevant Distribution Payment Date
Taxation Letter
the taxation letter from Allens dated 7 February 2013 in Section 6
TFN
Tax File Number
Third Party Broker
any third party brokers appointed to the Offer by the Joint Lead Managers
and agreed by Westpac
Third Party Broker
Amount
the Allocation to any Third Party Brokers multiplied by the Face Value
Tier 1 Capital
Tier 1 Capital as described by APRA from time to time
Tier 1 Capital Ratio
Tier 1 Capital ratio as described by APRA from time to time
Tier 2 Capital
Tier 2 Capital as described by APRA from time to time
APPENDIX A Glossary
107
For personal use only
Appendix A
Glossary
Total Capital
Total Capital as described by APRA from time to time
TPS 2003
750,000 trust preferred securities issued by Westpac Capital Trust III at
US$1,000 each on 13 August 2003 (referred to in the Westpac Capital Notes
Terms as TPS 2003 Preference Shares and TPS 2003 Debentures)
TPS 2004
525,000 trust preferred securities issued by Westpac Capital Trust IV
at US$1,000 each on 5 April 2004 (referred to in the Westpac Capital Notes
Terms as TPS 2004 Preference Shares and TPS 2004 Debentures)
Transfer
the transfer of Notes by Holders to a Nominated Party in accordance with
clause 7 of the Westpac Capital Notes Terms
Transferred has a corresponding meaning
Transfer Notice
a notice issued in accordance with clause 7 of the Westpac Capital Notes
Terms under which Westpac elects that a Transfer occur in relation to some
or all of the Notes
UBS
UBS AG, Australia Branch (ABN 47 088 129 613)
US Person
has the meaning given in Regulation S of the US Securities Act
US Securities Act
United States Securities Act of 1933, as amended
VWAP
subject to any adjustments under clauses 8.2 and 8.3 of the Westpac
Capital Notes Terms, the average of the daily volume weighted average
sale prices (rounded to the nearest full cent) of Ordinary Shares sold on
ASX during the relevant period or on the relevant days but does not include
any “crossing” transacted outside the “Open Session State” or any “special
crossing” transacted at any time, each as defined in the ASX Market Rules
or any overseas trades or trades pursuant to the exercise of options over
Ordinary Shares
VWAP Period
the period over which the VWAP is calculated
Westpac
Westpac Banking Corporation (ABN 33 007 457 141, AFSL No. 233714)
Westpac’s Constitution
the constitution of Westpac
Westpac Capital Notes
or Notes
are fully paid, non-cumulative, convertible, transferable, redeemable,
subordinated, perpetual, unsecured notes of Westpac issued under
the Offer in accordance with the Westpac Capital Notes Terms
Westpac Capital Notes
Terms
the Westpac Capital Notes terms of issue set out in Appendix B
Westpac CPS
the 11,893,605 Convertible Preference Shares issued by Westpac under
a prospectus dated 24 February 2012 (referred to in the Westpac Capital
Notes Terms as Westpac CPS 2012)
108
Prospectus
For personal use only
Westpac Directors
some or all of the directors of Westpac acting as a board
Westpac Group
Westpac and its controlled entities
Westpac Institutional
Bank
Westpac Institutional Bank, a division of Westpac
Westpac SPS
the 10,362,670 Westpac Stapled Preferred Securities issued by Westpac
under a prospectus dated 26 June 2008 (referred to in the Westpac Capital
Notes Terms as SPS 2008 I Preference Shares and SPS 2008 I Notes)
Westpac SPS II
the 9,083,278 Westpac Stapled Preferred Securities issued by Westpac
under a prospectus dated 2 March 2009 (referred to in the Westpac Capital
Notes Terms as SPS 2008 II Preference Shares and SPS 2008 II Notes)
Westpac Subordinated
Notes 2012
the 16,762,190 Westpac Subordinated Notes issued by Westpac under
an information memorandum dated 23 July 2012 and designated
as Westpac Subordinated Notes
Westpac TPS
the 7,627,375 Westpac Trust Preferred Securities issued under a product
disclosure statement dated 19 May 2006 (referred to in the Westpac Capital
Notes Terms as TPS 2006 Preference Shares and TPS 2006 Notes)
Winding Up
• a court order is made for the winding up of Westpac; or
• an effective resolution is passed by shareholders or members for
the winding up of Westpac, other than in connection with a Solvent
Reconstruction
APPENDIX A Glossary
109
For personal use only
B
Appendix B
Westpac Capital
Notes Terms
For personal use only
1. Form and Face Value of
Westpac Capital Notes
Westpac’s failure to pay Distributions or for any
other reason.
(a)are non-cumulative, convertible, transferable,
redeemable, subordinated, perpetual, unsecured
notes of Westpac;
(e)For the avoidance of doubt, but subject to clause
5.6, if a Capital Trigger Event or Non-Viability
Trigger Event has occurred, Holders will rank
for payment in a Winding Up as holders of the
number of Ordinary Shares to which they became
entitled under clauses 5.1 or 5.2.
(b)are designated as being of a particular series as
set out in the Prospectus;
3. Distributions
(c)are constituted under and issued on the terms set
out in the Deed Poll and these Terms; and
3.1 Distributions
1.1 Form
Westpac Capital Notes:
(d)take the form of entries in the Westpac Capital
Notes Register.
1.2 Face Value
Each Westpac Capital Note is issued fully paid at an
issue price of A$100.
2. Ranking on Winding Up
(a)Holders do not have any right to prove in
a Winding Up in respect of Westpac Capital
Notes, except as permitted under clause 2(b).
(b)Westpac Capital Notes will rank for payment of the
Liquidation Sum in a Winding Up:
(i) senior to Ordinary Shares;
(ii) equally among themselves and with all other
Equal Ranking Capital Securities;
(iii)junior to or equally with any other notes or
preference shares Westpac may issue, as may
be designated in the terms of issue for such
notes or preference shares; and
(iv)junior to, and are conditional on the
prior payment in full of, the claims of all
Senior Creditors.
(c)Holders may not exercise voting rights as
a creditor in respect of Westpac Capital Notes
in a Winding Up to defeat the subordination in
this clause.
(d)Westpac Capital Notes are perpetual and the
terms of Westpac Capital Notes do not include
events of default or any other provisions entitling
the Holders to require that Westpac Capital
Notes be Redeemed. Holders do not have any
right to apply for a Winding Up on the ground of
Subject to these Terms, each Westpac Capital
Note entitles the Holder to receive on the relevant
Distribution Payment Date interest on the Face
Value of the Westpac Capital Note (Distribution),
calculated using the following formula:
Distribution =
Distribution Rate x Face Value x N
365
where:
Distribution Rate (expressed as a percentage per
annum) is calculated using the following formula:
Distribution Rate = (Bank Bill Rate + Margin)
x (1 – Tax Rate)
where:
Bank Bill Rate (expressed as a percentage per
annum) means, for each Distribution Period, the
average mid-rate for bills of a term of 90 days which
average rate is displayed on Reuters page BBSW
(or any page that replaces that page) at 10.30am
(Sydney time) on, in the case of the first Distribution
Period, the Issue Date, and in the case of any other
Distribution Period, the first Business Day of that
Distribution Period, or if there is a manifest error in
the calculation of that average rate or that average
rate is not displayed at 10.30am (Sydney time) on
that date, the rate specified in good faith by Westpac
at or around that time on that date having regard,
to the extent possible, to:
(a)the rates otherwise bid and offered for bills
of a term of 90 days or for funds of that tenor
displayed on Reuters page BBSW (or any page
which replaces that page) at that time on that
date; and
APPENDIX B Westpac Capital Notes Terms
111
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Appendix B
Westpac Capital
Notes Terms
(ii) the payment of the Distribution not resulting
in a breach of Westpac’s capital requirements
under APRA’s prudential standards as they are
applied to the Westpac Group at the time of
the payment;
(b)if bid and offer rates for bills of a term of 90 days
are not otherwise available, the rates otherwise
bid and offered for funds of that tenor at or around
that time on that date;
Margin is 3.20% per annum;
(iii)the payment of the Distribution not resulting in
Westpac becoming, or being likely to become,
insolvent for the purposes of the Corporations
Act; and
Tax Rate (expressed as a decimal) means the
Australian corporate tax rate applicable to the
franking account of Westpac at the relevant
Distribution Payment Date; and
(iv)APRA not otherwise objecting to the payment
of the Distribution.
N means, in respect of a Distribution Period, the
number of days in that Distribution Period.
(b)Westpac must notify ASX as soon as reasonably
practicable if payment of any Distribution will not
be made because of this clause.
3.2 Adjustment to calculation of
Distributions if not fully franked
If payment of any Distribution will not be franked to
100% under Part 3-6 of the Tax Act (or any provisions
that revise or replace that Part), otherwise than
because of any act by, or circumstances affecting,
any particular Holder, the Distribution will be
calculated using the following formula:
Distribution =
D
1 – [Tax Rate x (1 – Franking Rate)]
3.4 Distributions are discretionary,
non‑cumulative and only payable
in cash
(a)Payments of Distributions are within the absolute
discretion of Westpac and are non-cumulative.
If a Distribution is not paid because of the
provisions of clause 3.3 or because of any other
reason, Westpac has no liability to pay such
Distribution to the Holder and the Holder has no:
(i) claim (including, without limitation, on
a Winding Up); or
where:
(ii) right to apply for a Winding Up,
D means the Distribution entitlement on that
Distribution Payment Date as calculated under clause
3.1;
Franking Rate (expressed as a decimal) means the
percentage of Distribution that would carry franking
credits (within the meaning of Part 3-6 of the Tax Act
or any provisions that revise or replace that Part),
applicable to the relevant Distribution entitlement on
that Distribution Payment Date.
3.3 Conditions to payment of Distributions
(a)The payment of any Distribution on a Distribution
Payment Date is subject to:
112
(b)Any payments of Distributions to Holders must be
made in the form of cash.
Non-payment of a Distribution because of the
provisions of clause 3.3, or because of any other
reason, does not constitute an event of default.
Tax Rate (expressed as a decimal) means the
Australian corporate tax rate applicable to the
franking account of Westpac at the relevant
Distribution Payment Date; and
(i) Westpac’s absolute discretion;
in respect of such non-payment.
3.5 Distribution Payment Date
Distributions in respect of Westpac Capital Notes
are payable:
(a)quarterly in arrear on 8 March, 8 June,
8 September and 8 December of each year,
commencing on 8 June 2013 until that Westpac
Capital Note has been Converted or Redeemed;
and
(b)on the Conversion Date or Redemption Date (as
the case may be) on which such Westpac Capital
Note is Converted or Redeemed,
(each a Distribution Payment Date).
Prospectus
For personal use only
3.6 Record Dates
3.9 Notification
Distributions are only payable on a Distribution
Payment Date to those persons registered as
Holders on the Record Date for that Distribution
Payment Date.
(a)In relation to each Distribution Period, Westpac
must notify the ASX of the Distribution Rate
and the amount of Distribution payable on each
Westpac Capital Note.
3.7 Restrictions in the case of
non‑payment of a Distribution
Subject to clause 3.8, if for any reason a Distribution
has not been paid in full on the relevant Distribution
Payment Date, Westpac must not:
(a)determine or pay any Dividends; or
(b)undertake any discretionary Buy Back or Capital
Reduction,
unless the amount of the unpaid Distribution is paid
in full within 20 Business Days of that Distribution
Payment Date or:
(c)all Westpac Capital Notes have been Converted
or Redeemed;
(d)on a subsequent Distribution Payment Date,
a Distribution for the subsequent Distribution
Period is paid in full; or
(e)a Special Resolution of the Holders has been
passed approving such action,
(b)Westpac must give notice under this clause 3.9 as
soon as practicable after it makes its calculations
or determinations and, in any event by no later
than the fifth Business Day of the relevant
Distribution Period.
(c)Westpac may amend the calculation or
determination of any amount, date, or rate (or
make appropriate alternative arrangements by
way of adjustment) including as a result of the
extension or reduction of a Distribution Period
without prior notice, but must notify ASX promptly
after doing so.
3.10 Calculations and determinations final
The calculation or determination by Westpac of
all rates and amounts payable by it in relation to
Westpac Capital Notes is, in the absence of manifest
or proven error, final and binding on Westpac, the
Registry and each Holder.
and, in respect of the actions contemplated
by paragraphs (c), (d) and (e), APRA does not
otherwise object.
4. Scheduled Conversion
3.8 Restrictions not to apply in
certain circumstances
Subject to clauses 5 and 6, Westpac must Convert
all (but not some) Westpac Capital Notes on issue on
the date that is the earlier of:
The restrictions in clause 3.7 do not apply in
connection with:
(a)any employment contract, benefit plan or other
similar arrangement with or for the benefit of
any one or more employees, officers, directors
or consultants of Westpac or any member of the
Westpac Group; or
(b)Westpac or any of its controlled entities
purchasing shares in Westpac in connection
with transactions for the account of customers
of Westpac or any of its controlled entities or
in connection with the distribution or trading
of shares in Westpac in the ordinary course of
business (such distribution or trading of shares in
the ordinary course of business is subject to the
prior written approval of APRA).
4.1 Scheduled Conversion
(a)8 March 2021; and
(b)the first Distribution Payment Date after
8 March 2021,
on which the Scheduled Conversion Conditions are
satisfied (each a Scheduled Conversion Date).
4.2 Scheduled Conversion Conditions
(a)The Scheduled Conversion Conditions for each
Scheduled Conversion Date are:
(i) the VWAP on the 25th Business Day on
which trading in Ordinary Shares took place
immediately preceding (but not including)
the Scheduled Conversion Date is greater
than 56.12% of the Issue Date VWAP (First
Scheduled Conversion Condition); and
APPENDIX B Westpac Capital Notes Terms
113
For personal use only
Appendix B
Westpac Capital
Notes Terms
terms require or permit them to be converted
or written down in that manner (subject to such
adjustment as Westpac may determine to take
into account the effect on marketable parcels
and whole numbers of Ordinary Shares and
any Westpac Capital Notes or other Relevant
Securities remaining on issue),
(ii) the VWAP during the period of 20 Business
Days on which trading in Ordinary Shares took
place immediately preceding (but not including)
the Scheduled Conversion Date is greater than
50.51% of the Issue Date VWAP (the Second
Scheduled Conversion Condition).
(b)If the First Scheduled Conversion Condition is
not satisfied, Westpac will announce to ASX not
less than 21 Business Days before the Scheduled
Conversion Date that Conversion will not proceed
on the Scheduled Conversion Date.
(c)If the Second Scheduled Conversion Condition
is not satisfied, Westpac will notify Holders on
or as soon as practicable after the Scheduled
Conversion Date that Conversion did not occur.
but such determination will not impede the
immediate Conversion of the relevant number of
Westpac Capital Notes or percentage of the Face
Value of each Westpac Capital Note (as the case
may be).
(d)If a Capital Trigger Event occurs:
5.1 Capital Trigger Event
(i) the relevant number of Westpac Capital Notes,
or percentage of the Face Value of each
Westpac Capital Note, must be Converted
immediately upon occurrence of the Capital
Trigger Event in accordance with clauses 5.5
and 8 and the Conversion will be irrevocable;
(a)Westpac must notify APRA immediately in writing
if it determines that a Capital Trigger Event has
occurred.
(ii) Westpac must give notice as soon as
practicable that Conversion has occurred to
ASX and the Holders;
(b)If a Capital Trigger Event occurs, Westpac must
Convert such number of Westpac Capital Notes
(or, if it so determines, such percentage of the
Face Value of each Westpac Capital Note) as is
sufficient (following any conversion or write down
of Relevant Securities as referred to in paragraph
(c)(i) below) to return either or both the Westpac
Level 1 Common Equity Tier 1 Capital Ratio or
Westpac Level 2 Common Equity Tier 1 Capital
Ratio, as the case may be, to above 5.125%.
(iii)the notice must specify the date on which
Conversion occurred (Capital Trigger Event
Conversion Date); and
5. Early Conversion
(iv)the notice must specify the details of the
Conversion process, including any details
which were taken into account in relation to
the effect on marketable parcels and whole
numbers of Ordinary Shares, and the impact
on any Westpac Capital Notes remaining
on issue.
(c)In determining the number of Westpac Capital
Notes, or percentage of the Face Value of each
Westpac Capital Note, which must be Converted
in accordance with this clause, Westpac will:
114
(i) first, convert or write down the face value of
any Relevant Securities whose terms require
them to be converted or written down, before
Conversion of Westpac Capital Notes; and
(ii) secondly, if conversion or write down of those
Relevant Securities is not sufficient, Convert
(in the case of Westpac Capital Notes) or
convert or write down (in the case of any other
Relevant Securities) on a pro-rata basis or in
a manner that is otherwise, in the opinion of
Westpac, fair and reasonable, Westpac Capital
Notes and any Relevant Securities whose
Failure to undertake any of the steps in clauses
5.1(d)(ii) to (iv) does not prevent, invalidate or
otherwise impede Conversion.
5.2 Non-Viability Trigger Event
(a)If a Non-Viability Trigger Event occurs, Westpac
must Convert such number of Westpac Capital
Notes (or, if it so determines, such percentage of
the Face Value of each Westpac Capital Note) as
is equal (following any conversion or write down
of Relevant Securities as referred to in paragraph
(b)(i) below) to the aggregate face value of capital
instruments which APRA has notified Westpac
must be converted or written down (or, if APRA
has not so notified Westpac, such number or,
if Westpac so determines, such percentage of
Prospectus
For personal use only
the Face Value of Westpac Capital Notes, as is
necessary to satisfy APRA that Westpac will no
longer be non-viable).
(b)In determining the number of Westpac Capital
Notes, or percentage of the Face Value of each
Westpac Capital Note, which must be Converted
in accordance with this clause, Westpac will:
(i) first, convert or write down the face value of
any Relevant Securities whose terms require
them to be converted or written down before
Conversion of Westpac Capital Notes; and
(ii) secondly, if conversion or write down of those
securities is not sufficient, Convert (in the
case of Westpac Capital Notes) or convert or
write down (in the case of any other Relevant
Securities), on a pro-rata basis or in a manner
that is otherwise, in the opinion of Westpac,
fair and reasonable, Westpac Capital Notes
and any Relevant Securities whose terms
require or permit them to be Converted,
converted or written down in that manner
(subject to such adjustments as Westpac may
determine to take into account the effect on
marketable parcels and whole numbers of
Ordinary Shares and any Westpac Capital
Notes or other Relevant Securities remaining
on issue),
but such determination will not impede the
immediate Conversion of the relevant number of
Westpac Capital Notes or percentage of the Face
Value of each Westpac Capital Note (as the case
may be).
(c)If a Non-Viability Trigger Event occurs:
(i) the relevant number of Westpac Capital
Notes, or percentage of the Face Value
of each Westpac Capital Note, must be
Converted immediately upon occurrence of
the Non‑Viability Trigger Event in accordance
with clauses 5.5 and 8 and the Conversion will
be irrevocable;
(ii) Westpac must give notice as soon as
practicable that Conversion has occurred to
ASX and the Holders;
(iii)the notice must specify the date on which
Conversion occurred (Non-Viability Trigger
Event Conversion Date); and
(iv)the notice must specify the details of the
Conversion process, including any details
which were taken into account in relation to
the effect on marketable parcels and whole
numbers of Ordinary Shares, and the impact
on any Westpac Capital Notes remaining
on issue.
Failure to undertake any of the steps in clauses
5.2(c)(ii) to (iv) does not prevent, invalidate or
otherwise impede Conversion.
5.3 Scheduled Conversion Conditions
not applicable
For the avoidance of doubt, the Scheduled
Conversion Conditions do not apply to Conversion
as a result of a Capital Trigger Event or Non-Viability
Trigger Event occurring.
5.4 Priority of early Conversion obligations
A Conversion required because of a Capital Trigger
Event or a Non-Viability Trigger Event takes place
notwithstanding anything in clause 4.
5.5 Automatic Conversion upon the
occurrence of a Capital Trigger Event
or Non-Viability Trigger Event
If a Capital Trigger Event or Non-Viability Trigger
Event has occurred and all or some Westpac Capital
Notes (or percentage of the Face Value of each
Westpac Capital Note) are required to be Converted
in accordance with clauses 5.1 or 5.2, then:
(a)Conversion of the relevant Westpac Capital Notes
or percentage of the Face Value of each Westpac
Capital Note will be taken to have occurred in
accordance with clause 8 immediately upon the
Capital Trigger Event Conversion Date or NonViability Trigger Event Conversion Date; and
(b)the entry of the corresponding Westpac Capital
Notes in each relevant Holder’s holding in the
Westpac Capital Notes Register will constitute an
entitlement of that Holder to the relevant number
of Ordinary Shares (and, if applicable, also to any
remaining balance of Westpac Capital Notes or
Westpac Capital Notes with a Face Value equal to
the aggregate of the remaining percentage of the
Face Value of each Westpac Capital Note), and
Westpac will recognise the Holder as having been
issued the relevant Ordinary Shares for all purposes,
in each case without the need for any further act or
step by Westpac, the Holder or any other person
APPENDIX B Westpac Capital Notes Terms
115
For personal use only
Appendix B
Westpac Capital
Notes Terms
(and Westpac will, as soon as possible thereafter
and without delay on the part of Westpac, take
any appropriate procedural steps to record such
Conversion, including updating the Westpac Capital
Notes Register and the Ordinary Share register).
5.6 No further rights if Conversion
cannot occur
If for any reason Conversion of any Westpac Capital
Notes (or a percentage of the Face Value of any
Westpac Capital Notes) required to be Converted
under clause 5.1 or 5.2 fails to take effect under
clause 5.5(a) and (b) and Westpac is not otherwise
able to issue the Ordinary Shares required to be
issued in respect of such Conversion within five
Business Days after the Capital Trigger Event
Conversion Date or Non-Viability Trigger Event
Conversion Date, then the relevant Holders’ rights
(including to Distributions) in relation to such
Westpac Capital Notes or percentage of the Face
Value of Westpac Capital Notes are immediately and
irrevocably terminated.
5.7 Automatic Conversion upon the
occurrence of an Acquisition Event
(a)If an Acquisition Event occurs, then:
(i) Westpac must Convert all (but not some)
Westpac Capital Notes;
(ii) Westpac must give notice as soon as
practicable and in any event within 10
Business Days after becoming aware of that
event occurring to ASX and the Holders;
(iii)the notice must specify a date on which it is
proposed Conversion will occur (proposed
Acquisition Event Conversion Date) being:
(v)on the proposed Acquisition Event Conversion
Date, all Westpac Capital Notes will Convert in
accordance with clause 8.
(b)Subject to clause 5.7(a), the Second Scheduled
Conversion Condition applies to a Conversion
following an Acquisition Event as though the
proposed Acquisition Event Conversion Date were
a Scheduled Conversion Date for the purposes of
clause 4 (except that in the case of an Acquisition
Event, the Second Scheduled Conversion
Condition will apply as if it referred to 20.20% of
the Issue Date VWAP). If the Second Scheduled
Conversion Condition is not satisfied, the Westpac
Capital Notes will not Convert.
(c)If the Second Scheduled Conversion Condition is
not satisfied on the proposed Acquisition Event
Conversion Date, Westpac will notify Holders as
soon as practicable after the proposed Acquisition
Event Conversion Date that Conversion did not
occur.
5.8 Issue of ordinary shares of successor
holding company
Where there is a replacement of Westpac as the
ultimate holding company of the Westpac Group
and the successor holding company is an Approved
Successor, mandatory Conversion of the Westpac
Capital Notes may not occur as a consequence of the
Replacement. Instead, these Terms may be amended
in accordance with clause 12.4.
5.9 No Conversion at the option of the
Holders
Holders do not have a right to request Conversion of
their Westpac Capital Notes at any time.
(A)in the case of an Acquisition Event that is
a takeover bid, no later than the Business
Day prior to the then announced closing
date of the relevant takeover bid; or
(B)in the case of an Acquisition Event that is
a court approved scheme, a date no later
than the record date for participation in the
relevant scheme of arrangement; and
(iv)the notice must specify the details of the
Conversion process including any details to
take into account the effect on marketable
parcels and whole numbers of Ordinary
Shares; and
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6. Early Redemption
6.1 Early Redemption at the option of
Westpac on the Optional Redemption/
Transfer Date
(a)Subject to paragraph (b), Westpac may at its
option Redeem all or some Westpac Capital Notes
on the Optional Redemption/Transfer Date for
their Face Value.
(b)Westpac may only Redeem under this clause
6 if Westpac has given notice of its election to
do so at least 20 Business Days (and no more
than 60 Business Days) before the Optional
Redemption/Transfer Date to ASX and the
Holders.
(c)If only some (but not all) Westpac Capital Notes
are to be Redeemed under this clause, those
Westpac Capital Notes to be Redeemed will be
specified in the notice and selected:
(i) in a manner that is, in the opinion of Westpac,
fair and reasonable; and
(ii) in compliance with any applicable law, directive
or requirement of ASX.
6.2 Early Redemption for a Franking Event,
Tax Event or Regulatory Event
If a Franking Event, Tax Event or Regulatory Event
occurs, Westpac may Redeem all (but not some)
Westpac Capital Notes for their Face Value.
However, Westpac may only Redeem under this
clause if:
(a)Westpac has given notice of its election to do
so at least 20 Business Days (and no more
than 60 Business Days) before the proposed
Redemption Date to ASX and the Holders;
(b)before Westpac gives the notice under clause
6.2(a), it must have received:
(i) in the case of a Franking Event, a supporting
opinion of reputable legal counsel or other
tax adviser in Australia, experienced in such
matters, in relation to such Franking Event;
(iii)in the case of a Regulatory Event, a supporting
opinion of reputable legal counsel in Australia,
experienced in such matters, or confirmation
from APRA, in relation to such Regulatory
Event.
(c)the proposed Redemption Date would be a
Distribution Payment Date under clause 3.5(a);
and
(d)the notice of Redemption is not given earlier than
60 Business Days before the Distribution Payment
Date occurring immediately before:
(i) in the case of a Franking Event, the earliest
date on which a Distribution would not be a
frankable Distribution;
(ii) in the case of a Tax Event, the earliest date
on which Westpac would be subject to the
adverse tax consequence; and
(iii)in the case of a Regulatory Event, the earliest
date on which either:
(A)the event contemplated under paragraph
(a) of the definition of Regulatory Event has
arisen; or
(B)all, some or a proportion of all or some
Westpac Capital Notes will cease to be
treated as Additional Tier 1 Capital as
contemplated under paragraph (b) of the
definition of Regulatory Event.
6.3 APRA approval to Redeem
Westpac may only Redeem under this clause 6 if:
(a)either
(i) before or concurrently with Redemption,
Westpac replaces Westpac Capital Notes
with a capital instrument which is of the same
or better quality (for the purposes of APRA’s
prudential standards as they are applied to
the Westpac Group at the relevant time) than
Westpac Capital Notes and the replacement
of Westpac Capital Notes is done under
conditions that are sustainable for the income
capacity of the Westpac Group; or
(ii) in the case of a Tax Event, a supporting
opinion of reputable legal counsel or other
tax adviser in Australia, experienced in such
matters, in relation to such Tax Event; and
APPENDIX B Westpac Capital Notes Terms
117
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Appendix B
Westpac Capital
Notes Terms
per Westpac Capital Note equal to the Face
Value (and to have appointed Westpac as
its agent and attorney to execute documents
and do all things necessary which Westpac
considers may be necessary or desirable in
connection with that offer and any resulting
sale);
(ii) Westpac obtains confirmation from APRA that
APRA is satisfied, having regard to the capital
position of the Westpac Group, that Westpac
does not have to replace Westpac Capital
Notes; and
(b)APRA has given its prior written approval to the
Redemption. Approval is at the discretion of APRA
and may or may not be given.
(ii) subject to payment by the Nominated Party of
the Face Value to Holders, all right, title and
interest in the relevant number of Westpac
Capital Notes will be transferred from the
Holders to the Nominated Party on the
Optional Redemption/Transfer Date; and
6.4 Final Distribution
For the avoidance of doubt, Redemption may occur
even if Westpac, in its absolute discretion, does not
pay a Distribution for the final Distribution Period.
(iii)if the Nominated Party does not pay the Face
Value to the relevant Holders on the Optional
Redemption/Transfer Date, the relevant
number of Westpac Capital Notes will not be
transferred to the Nominated Party.
6.5 No Redemption at the option
of the Holders
Holders do not have a right to request Redemption
of their Westpac Capital Notes at any time.
6.6 Effect of notice of Redemption
Any notice of Redemption given under this clause
6 is irrevocable and Westpac must (subject to
clause 10.1) Redeem Westpac Capital Notes on the
Redemption Date specified in that notice.
7. Transfer on the Optional
Redemption/Transfer Date
(a)Westpac may elect that Transfer occur in relation
to all or some Westpac Capital Notes by giving
a Transfer Notice at least 20 Business Days
(and no more than 60 Business Days) before the
Optional Redemption/Transfer Date to ASX and
the Holders.
(c)Clause 10 will apply to payments by the
Nominated Party as if the Nominated Party were
Westpac. If any payment to a particular Holder
is not made or treated as made on the Optional
Redemption/Transfer Date because of any error
by or on behalf of the Nominated Party, the
relevant Westpac Capital Notes of that Holder
will not be transferred until payment is made but
the transfer of all other relevant Westpac Capital
Notes will not be affected by the failure.
(d)Holders do not have a right to request Transfer of
their Westpac Capital Notes at any time.
8. General provisions
applicable to Conversion
8.1 Conversion
If only some (but not all) Westpac Capital
Notes are to be Transferred under this clause,
the number of Westpac Capital Notes to be
Transferred will be specified in the notice and
selected:
On the Conversion Date, subject to clauses 5.6 and
8.10, the following will apply:
(i) in a manner that is, in the opinion of Westpac,
fair and reasonable; and
(ii) in compliance with any applicable law, directive
or requirement of ASX.
(b)If Westpac issues a Transfer Notice:
(a)Westpac will allot and issue the Conversion
Number of Ordinary Shares for each Westpac
Capital Note held by the Holder. The Conversion
Number is calculated according to the following
formula, and subject always to the Conversion
Number being no greater than the Maximum
Conversion Number:
(i) each Holder is taken irrevocably to offer to sell
the relevant number of their Westpac Capital
Notes to the Nominated Party on the Optional
Redemption/Transfer Date for a cash amount
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Conversion Number for each
=
Westpac Capital Note
Face Value
0.99 x VWAP
For personal use only
where:
VWAP (expressed in dollars and cents) means the
VWAP during the VWAP Period.
Maximum Conversion Number means a number
calculated according to the following formula:
Face Value
Maximum Conversion =
Relevant Percentage x
Number
Issue Date VWAP
Relevant Percentage means:
(i) if Conversion is occurring on a Scheduled
Conversion Date, 0.50; and
(ii) Conversion is occurring at any other time, 0.20.
(b)Each Holder’s rights (including to Distributions)
in relation to each Westpac Capital Note that
is being Converted will be immediately and
irrevocably terminated for an amount equal to the
Face Value and Westpac will apply the Face Value
of each Westpac Capital Note by way of payment
for the subscription for the Ordinary Shares to
be allotted and issued under clause 8.1(a). Each
Holder is taken to have irrevocably directed that
any amount payable under this clause 8.1 is to be
applied as provided for in this clause and Holders
do not have any right to payment in any other way.
(c)If the total number of Ordinary Shares to be
allotted and issued in respect of a Holder’s
aggregate holding of Westpac Capital Notes
includes a fraction of an Ordinary Share, that
fraction of an Ordinary Share will be disregarded.
8.2 Adjustments to VWAP generally
For the purposes of calculating VWAP under
clause 8.1:
(a)where, on some or all of the Business Days in
the relevant VWAP Period, Ordinary Shares have
been quoted on ASX as cum dividend or cum
any other distribution or entitlement and Westpac
Capital Notes will be Converted into Ordinary
Shares after that date and those Ordinary Shares
will no longer carry that dividend or that other
distribution or entitlement, then the VWAP on the
Business Days on which those Ordinary Shares
have been quoted cum dividend or cum any other
distribution or entitlement will be reduced by an
amount (Cum Value) equal to:
(i) in the case of a dividend or other distribution,
the amount of that dividend or other distribution
including, if the dividend or distribution is
franked, the amount that would be included
in the assessable income of a recipient of the
dividend or distribution who is a natural person
resident in Australia under the Tax Act;
(ii) in the case of any other entitlement that is not
a dividend or other distribution under clause
8.2(a)(i) which is traded on ASX on any of
those Business Days, the volume weighted
average price of all such entitlements sold on
ASX during the VWAP Period on the Business
Days on which those entitlements were traded
(excluding trades of the kind that would be
excluded in determining VWAP under the
definition of that term); or
(iii)in the case of any other entitlement which is
not traded on ASX during the VWAP Period,
the value of the entitlement as reasonably
determined by Westpac; and
(b)where, on some or all of the Business Days in
the VWAP Period, Ordinary Shares have been
quoted as ex dividend or ex any other distribution
or entitlement, and Westpac Capital Notes will
be Converted into Ordinary Shares which would
be entitled to receive the relevant dividend,
distribution or entitlement, the VWAP on the
Business Days on which those Ordinary Shares
have been quoted ex dividend or ex any other
distribution or entitlement will be increased by the
Cum Value.
8.3 Adjustments to VWAP for capital
reconstruction
(a)Where during the relevant VWAP Period there
is a change to the number of Ordinary Shares
on issue because the Ordinary Shares are
reconstructed, consolidated, divided or reclassified
(in a manner not involving any cash payment to or
by holders of Ordinary Shares) (Reclassification)
into a lesser or greater number, the daily VWAP for
each day in the VWAP Period which falls before
the date on which trading in Ordinary Shares is
conducted on a post Reclassification basis will be
adjusted by multiplying the VWAP applicable on
the Business Day immediately before the date of
any such Reclassification by the following formula:
APPENDIX B Westpac Capital Notes Terms
119
For personal use only
Appendix B
Westpac Capital
Notes Terms
Vo means the Issue Date VWAP applying
immediately prior to the application of this formula;
A
B
RD means the number of Ordinary Shares on
issue immediately prior to the allotment of new
Ordinary Shares pursuant to the bonus issue; and
Where:
A means the aggregate number of Ordinary
Shares immediately before the Reclassification;
and
B means the aggregate number of Ordinary
Shares immediately after the Reclassification.
(b)Any adjustment made by Westpac in accordance
with clause 8.3(a) will be effective and binding on
Holders under these Terms and these Terms will
be construed accordingly.
8.4 Adjustments to Issue Date
VWAP generally
For the purposes of determining the Issue Date
VWAP under clause 8.1, adjustments will be made in
accordance with clause 8.2 and clause 8.3 during the
VWAP Period for the Issue Date VWAP. On and from
the Issue Date, adjustments to the Issue Date VWAP:
(a)may be made by Westpac in accordance with
clauses 8.5 to 8.7 (inclusive);
(b)if so made, will correspondingly affect the
application of the Scheduled Conversion
Conditions and cause an adjustment to the
Maximum Conversion Number; and
(c)if so made, will be effective and binding on
Holders under these Terms and these Terms will
be construed accordingly.
8.5 Adjustments to Issue Date VWAP for
bonus issues
RN means the number of Ordinary Shares issued
pursuant to the bonus issue.
(b)Clause 8.5(a) does not apply to Ordinary Shares
issued as part of a bonus share plan, employee or
executive share plan, executive option plan, share
top up plan, share purchase plan or a dividend
reinvestment plan.
(c)For the purposes of this clause, an issue will
be regarded as a bonus issue notwithstanding
that Westpac does not make offers to some or
all holders of Ordinary Shares with registered
addresses outside Australia, provided that in so
doing Westpac is not in contravention of the ASX
Listing Rules.
8.6 Adjustments to Issue Date VWAP for
capital reconstruction
If at any time after the Issue Date there is a change
to the number of Ordinary Shares on issue because
of a Reclassification (in a manner not involving any
cash payment to or by holders of Ordinary Shares)
into a lesser or greater number, the Issue Date
VWAP will be adjusted by multiplying the Issue Date
VWAP applicable on the Business Day immediately
before the date of any such Reclassification by the
following formula:
A
(a)Subject to clauses 8.5(b) and 8.5(c), if Westpac
makes a pro-rata bonus issue of Ordinary Shares
to holders of Ordinary Shares generally (in a
manner not involving any cash payment to or
by holders of Ordinary Shares), the Issue Date
VWAP will be adjusted immediately in accordance
with the following formula:
V = Vo x RD/(RD + RN)
B
where:
A means the aggregate number of Ordinary Shares
on issue immediately before the Reclassification; and
B means the aggregate number of Ordinary Shares
on issue immediately after the Reclassification.
Where:
V means the Issue Date VWAP applying
immediately after the application of this formula;
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8.7 No adjustment to Issue Date VWAP
in certain circumstances
Despite the provisions of clauses 8.5 and 8.6, no
adjustment will be made to the Issue Date VWAP
where any such adjustment (rounded if applicable)
would be less than one percent of the Issue Date
VWAP then in effect.
8.8 Announcement of adjustments to Issue
Date VWAP
Westpac will notify any adjustment to the Issue Date
VWAP under this clause to ASX and the Holders
within 10 Business Days of Westpac determining
the adjustment and the adjustment will be final
and binding.
8.9 Status and listing of Ordinary Shares
(a)Ordinary Shares issued or arising from
Conversion will rank equally with all other fully
paid Ordinary Shares provided that the rights
attaching to the Ordinary Shares issued or arising
from Conversion do not take effect until 5.00pm
(Sydney time) on the Conversion Date.
(b)Westpac will use all reasonable endeavours to
list the Ordinary Shares issued on Conversion
of Westpac Capital Notes on ASX.
8.10 Conversion where the Holder does
not wish to receive Ordinary Shares
or is an Ineligible Holder
(a)If Westpac Capital Notes of a Holder are required
to be Converted and:
(i) the Holder has notified Westpac that it does
not wish to receive Ordinary Shares as a result
of Conversion, which notice may be given at
any time on or after the Issue Date and prior
to the Conversion Date; or
(ii) the Holder is an Ineligible Holder,
then, on the Conversion Date, the Holder’s rights
(including to Distributions) in relation to each
such Westpac Capital Note being Converted
are immediately and irrevocably terminated
and Westpac will issue the Conversion Number
of Ordinary Shares to the Sale Agent for no
additional consideration to hold on trust for sale
for the benefit of the relevant Holder. At the first
opportunity to sell the Ordinary Shares, the Sale
Agent will arrange for their sale at market value
and pay the proceeds less selling costs to the
relevant Holder.
(b)If Conversion under this clause 8.10 is occurring
because of the occurrence of a Capital Trigger
Event or Non-Viability Trigger Event and the
Conversion fails to take effect and Westpac is
not otherwise able to issue Ordinary Shares to
the Sale Agent within five Business Days, then
Holders’ rights will be immediately and irrevocably
terminated in accordance with clause 5.6.
8.11 Final Distribution
For the avoidance of doubt, Conversion may occur
even if Westpac, in its absolute discretion, does not
pay a Distribution for the final Distribution Period.
8.12 No Conversion after Winding Up
commences
If before the Conversion Date an order is made
by a court, or an effective resolution is passed, for
Winding Up, then Conversion will not occur and
clause 2 will apply, except where Conversion is
required for a Capital Trigger Event or Non-Viability
Trigger Event (in which case such Conversion shall
occur (subject to clause 5.6) in accordance with
clause 5.1 or 5.2 (as applicable) and clause 5.5).
8.13 Conversion of a percentage of
Face Value
If under these Terms it is necessary to Convert
a percentage of the Face Value, this clause 8 will
apply to the Conversion as if references to the Face
Value were references to the relevant percentage
of the Face Value to be Converted multiplied by
the Face Value.
9. Title and transfer of
Westpac Capital Notes
9.1 CHESS
While Westpac Capital Notes remain in CHESS,
all dealings (including transfers and payments) in
relation to Westpac Capital Notes within CHESS, and
the rights and obligations of each Holder, are subject
to the rules and regulations of CHESS.
APPENDIX B Westpac Capital Notes Terms
121
For personal use only
Appendix B
Westpac Capital
Notes Terms
9.2 Effect of entries in Westpac Capital
Notes Register
Each entry in the Westpac Capital Notes Register of
a person as a Holder constitutes:
(a)conclusive evidence of that person’s:
(i) absolute ownership of those Westpac Capital
Notes; and
(ii) entitlement to the other benefits given to
Holders under these Terms in respect of
Westpac Capital Notes; and
(b)an undertaking by Westpac to pay a Distribution
and any other amount in accordance with
these Terms,
subject to correction of the Westpac Capital Notes
Register for fraud or error.
9.3 Non-recognition of interests
Except as required by law, Westpac and the Registry
must treat the person whose name is entered in the
Westpac Capital Notes Register as a Holder as the
absolute owner of that Westpac Capital Notes. This
clause applies despite any notice of ownership, trust
or interest in that Westpac Capital Notes.
9.4 Joint Holders
delivered to the Registry with any evidence
the Registry reasonably requires to prove
title to or the right to transfer Westpac
Capital Notes.
(b)Title to Westpac Capital Notes passes when
details of the transfer are entered in the Westpac
Capital Notes Register.
(c)Westpac Capital Notes may be transferred in
whole but not in part.
(d)Westpac must comply with all Applicable
Regulations and any other relevant obligations
imposed on it in relation to the transfer of Westpac
Capital Notes.
(e)Westpac must not charge any fee on the transfer
of Westpac Capital Notes.
(f) The Holder is responsible for any stamp duty
or other similar taxes which are payable in
any jurisdiction in connection with a transfer,
assignment or other dealing with Westpac Capital
Notes.
(g)Upon registration and entry of the transferee in
the Westpac Capital Notes Register, the transferor
ceases to be entitled to future benefits under
these Terms in respect of the transferred Westpac
Capital Notes.
(h)Subject to Applicable Regulations, Westpac may
determine that transfers of some or all Westpac
Capital Notes will not be registered during any
period reasonably specified by it prior to the
Conversion Date, Redemption Date or Optional
Redemption/Transfer Date of such Westpac
Capital Notes.
Where two or more persons are entered in the
Westpac Capital Notes Register as joint Holders,
they are taken to hold those Westpac Capital
Notes as joint tenants with rights of survivorship
but the Registry is not bound to register more than
three persons as joint Holders of any Westpac
Capital Notes.
9.6 Refusal to register
9.5 Transfers
(a)A Holder may transfer Westpac Capital Notes:
(i) while Westpac Capital Notes are registered
with CHESS, in accordance with the rules and
regulations of CHESS; or
(ii) at any other time:
(A)by a proper transfer under any other
applicable computerised or electronic
system recognised by the Corporations Act;
or
Westpac may only refuse to register a transfer of
Westpac Capital Notes if permitted by, or if such
registration would contravene or is forbidden by,
Applicable Regulations or the Terms.
If Westpac refuses to register a transfer, Westpac
must give the lodging party notice of the refusal and
the reasons for it within five Business Days after
the date on which the transfer was delivered to
the Registry.
(B)by any proper or sufficient instrument of
transfer of marketable securities under
applicable law, provided such instrument is
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9.7 Transmission
10.2 Payments to Holders
A person becoming entitled to Westpac Capital
Notes as a consequence of the death, bankruptcy,
liquidation or a winding-up of a Holder or of a vesting
order by a court or other body with power to make
the order, or a person administering the estate of
a Holder, may, upon providing evidence as to that
entitlement or status, and if Westpac so requires
an indemnity in relation to the correctness of
such evidence, as Westpac considers sufficient,
become registered as the Holder of those Westpac
Capital Notes.
(a)Each payment in respect of a Westpac Capital
Note will be made to the person that is recorded in
the Westpac Capital Notes Register as the Holder
of that Westpac Capital Note on the Record Date
for that payment.
10. Payments
10.1 General
All payments in respect of Westpac Capital Notes:
(a)must be made:
(i) in Australian dollars; and
(ii) free of any set off, deduction or counter claim
except as required by law or any agreement
with a governmental authority;
(b)are subject to applicable fiscal and other laws and
the administrative practices and procedures of
fiscal and other authorities;
(c)will be made in accordance with:
(i) the rules and regulations of CHESS while
Westpac Capital Notes remain in CHESS;
(ii) the particulars recorded in the Westpac Capital
Notes Register on the relevant Record Date;
and
(iii)these Terms.
If the date scheduled for any payment under these
Terms is not a Business Day, then the payment will
be made on the next Business Day (and without any
additional interest or other payment in respect of
such delay).
All calculations of payments will be rounded to four
decimal places. For the purposes of making any
payment in respect of a Holder’s aggregate holding of
Westpac Capital Notes, any fraction of a cent will be
disregarded.
(b)A payment to any one joint Holder of a Westpac
Capital Note will discharge Westpac’s liability in
respect of the payment.
10.3 Method of payments
(a)Westpac may, in its absolute discretion, pay to
a Holder or any other person entitled to any amount
payable in respect of a Westpac Capital Note:
(i) by crediting an account nominated in writing
by that Holder or person;
(ii) by cheque made payable to the Holder or
person, sent to the address of that Holder or
person as notified to Westpac by that Holder
or person; or
(iii)in any other manner as Westpac determines
(provided that Distributions must always be
paid in cash).
(b)Westpac may send a cheque referred to in
clause 10.3(a)(ii), if relevant, to:
(i) the address in the Westpac Capital Notes
Register of the Holder;
(ii) if that Westpac Capital Note is jointly held, the
address in the Westpac Capital Notes Register
of the Holder named first in the register in
respect of the Westpac Capital Note; or
(iii)any other address which that person directs
in writing.
(c)If Westpac decides to make a payment by
electronic or other means determined under
clause 10.3(a)(iii) and an account is not nominated
by the Holder or joint Holder, Westpac may hold
the amount payable in a separate account of
Westpac until the Holder or joint Holder (as the
case may be) nominates an account, without any
obligation to pay interest, and the amount so held
is to be treated as having been paid to the Holder
or joint Holder at the time it is credited to that
separate account of Westpac.
APPENDIX B Westpac Capital Notes Terms
123
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Appendix B
Westpac Capital
Notes Terms
(d)All amounts payable but unclaimed may be
invested by Westpac as it thinks fit for the benefit
of Westpac until claimed or until required to be
dealt with in accordance with any law relating to
unclaimed moneys.
(e)Westpac, in its absolute discretion may withhold
payment to a Holder where it is required to do
so under any applicable fiscal or other law or
any administrative practice or procedure of
any fiscal or other authority (including any law
prohibiting dealings with terrorist organisations
or money laundering), or any other type of
sanction or where it has reasonable grounds to
suspect that the Holder may be subject to any
such law, administrative practice or procedure or
sanction or involved in acts of terrorism or money
laundering, and may deal with such payment and
the Holder’s Westpac Capital Note in accordance
with such applicable law, administrative practice
or procedure or the requirements of any relevant
government or regulatory authority.
(f) Westpac shall not be liable for any costs or loss
suffered by a Holder in exercising its discretion
under clause 10.3(e), even where a Holder
later demonstrates that they were not subject to
such law, administrative practice or procedure
or sanction.
11. Taxation
11.1 Deductions
Westpac or the Nominated Party, as applicable,
may deduct or withhold any tax, duty, assessment,
levy, governmental charge or other amount
from any Distribution or amount payable upon
Redemption or Transfer to the Nominated Party of
any Westpac Capital Note (or upon or with respect
to the issuance of any Ordinary Shares upon any
Conversion), as required by law or any agreement
with a governmental authority. If any such deduction
or withholding has been made and paid over to the
relevant governmental authority and the balance
of the Distribution or other amount payable has
been paid (or, in the case of a Conversion, Ordinary
Shares issued) to the relevant Holder, then the full
amount payable (or, in the case of a Conversion,
the Conversion Number of Ordinary Shares) to such
Holder shall be deemed to have been duly paid and
124
satisfied (or, in the case of a Conversion, issued)
by Westpac or the Nominated Party, as applicable.
Westpac or the Nominated Party, as applicable,
shall pay the full amount required to be deducted
or withheld to the relevant governmental authority
within the time allowed for such payment without
incurring any penalty under applicable law and shall,
if requested by any Holder, deliver to such Holder
confirmation of such payment without delay after
it is received by Westpac or the Nominated Party,
as applicable.
11.2 FATCA
Without limiting clause 11.1, if any withholding or
deduction arises under or in connection with FATCA,
Westpac will not be required to pay any further
amounts on account of such withholding or deduction
or otherwise reimburse or compensate, or make any
payment to, a Holder for or in respect of any such
withholding or deduction.
11.3 Tax File Number withholdings
(a)Westpac will, if required, withhold an amount
from payment of Distributions on Westpac Capital
Notes at the highest marginal tax rate plus the
highest Medicare levy if a Holder has not supplied
an appropriate tax file number, Australian business
number or exemption details.
(b)If a Holder supplies exemption details and
Westpac subsequently determines that the
relevant exemption was not available, Westpac
may recover the amount that should have been
deducted from the relevant Holder and may deduct
that amount from any subsequent payment due to
that Holder in respect of Westpac Capital Notes.
12. Amendment of these Terms
12.1 Amendment generally
No amendment to these Terms is permitted without
APRA’s prior written approval if such amendment
would impact, or potentially impact, the classification
of the Westpac Capital Notes as Additional Tier 1
Capital on a Level 1 or Level 2 basis.
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12.2 Amendment without consent
Subject to clause 12.1, and complying with all
applicable laws and with APRA’s prior written
approval (except in the case of paragraph (a)(iii)
below), Westpac may, without the authority, assent
or approval of Holders, amend these Terms:
(a)if Westpac is of the opinion that the amendment is:
(i) of a formal, minor or technical nature;
(ii) made to cure any ambiguity;
(iii)made to correct any manifest error;
(iv)expedient for the purpose of enabling the
Westpac Capital Notes to be listed for
quotation or to retain listing on any stock
exchange or to be offered for, or subscription
for, sale under the laws for the time being
in force in any place and it is otherwise not
considered by Westpac to be materially
prejudicial to the interests of Holders as
a whole; or
(v)necessary to comply with the provisions of
any statute, the requirements of any statutory
authority, the ASX Listing Rules or the listing or
quotation requirements of any stock exchange
on which the Westpac Capital Notes are
quoted; or
(b)generally, in any case where such amendment
is considered by Westpac not to be materially
prejudicial to the interests of Holders as a whole.
12.3 Amendment with consent
Without limiting clause 12.2 and subject to clause
12.1, Westpac may, with APRA’s prior written
approval, amend these Terms if the amendment has
been approved by a Special Resolution.
12.4 Amendment for successor holding
company
(a)Subject to clause 12.4(c), if:
(i) it is proposed that Westpac be replaced
as the ultimate holding company of the
Westpac Group by an Approved Successor
(Replacement); and
(ii) the Approved Successor agrees to expressly
assume Westpac’s obligations under these
Terms by entering into a deed poll for the
benefit of Holders under which it agrees
(among other things):
(A)to deliver Approved Successor Shares
under all circumstances when Westpac
would have otherwise been obliged to
deliver Ordinary Shares on a Conversion,
subject to the same terms and conditions
of these Terms as amended by this
clause 12.4;
(B)to comply with the restriction in clause 3.7
(with all appropriate modifications) of these
Terms; and
(C)to use all reasonable endeavours and
furnish all such documents, information
and undertakings as may be reasonably
necessary in order to procure quotation of the
Approved Successor Shares issued under
these Terms on the stock exchanges on
which the other Approved Successor Shares
are quoted at the time of a Conversion,
Westpac may, with APRA’s prior written
approval, but without the authority, assent or
approval of Holders, give a notice (an Approved
Replacement Notice) to Holders (which, if given,
must be given as soon as practicable before the
Replacement and in any event no later than 10
Business Days before the Replacement occurs)
specifying the amendments to these Terms which
will be made in accordance with this clause
12.4 to effect the substitution of the Approved
Successor as the debtor in respect of Westpac
Capital Notes and the issuer of ordinary shares
on Conversion.
An Approved Replacement Notice, once given,
is irrevocable.
(b)If Westpac gives an Approved Replacement Notice
to Holders in accordance with clause 12.4(a), then
with effect on and from the date specified in the
Approved Replacement Notice:
(i) the Approved Successor will assume all of
the obligations of, and succeed to, and be
substituted for, and may exercise every right
and power of, Westpac under these Terms (as
may be amended from time to time) with the
same effect as if the Approved Successor had
been named as Westpac in these Terms;
(ii) Westpac (or any corporation which has
previously assumed the obligations of
Westpac) will be released from its liability
under the Terms;
APPENDIX B Westpac Capital Notes Terms
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Appendix B
Westpac Capital
Notes Terms
things necessary or desirable to give effect to this
clause 12.4.
(iii)references to Westpac in these Terms
will be taken to be references to the
Approved Successor;
(iv)the definition of Conversion in these Terms
may be amended such that, with APRA’s prior
written approval, on the date on which the
Westpac Capital Notes are to be Converted:
(i) the Approved Successor or another entity not
related to Westpac and approved by APRA
subscribes for Ordinary Shares or other
capital instruments acceptable to APRA in
such amount as may be necessary, or take
other steps acceptable to APRA to ensure that
the capital position of the Westpac Level 1
Group will not be adversely affected, including,
as required by APRA or APRA’s prudential
requirements, undertaking any capital injection
in relation to Westpac to replace the Westpac
Capital Notes; and
(A)each Westpac Capital Note that is being
Converted will be automatically transferred
by each Holder free from encumbrances
to the Approved Successor on the date the
Conversion is to occur;
(B)each Holder will be issued a number of
Approved Successor Shares equal to the
Conversion Number (which is calculated
using the formula in clause 8.1 as though
references in that clause to Ordinary
Shares are references to Approved
Successor Shares); and
(C)as between Westpac and the Approved
Successor, each Westpac Capital Note
held by the Approved Successor as
a result of the transfer will be automatically
Converted into an Ordinary Share such that
the total number of Ordinary Shares held by
the Approved Successor equals the number
of Approved Successor Shares issued by
the Approved Successor to Holders on
Conversion; and
(v)such other amendments may be made to these
Terms as in Westpac’s reasonable opinion
are necessary and appropriate to effect the
substitution of an Approved Successor as
debtor in respect of Westpac Capital Notes
and the issuer of the ordinary shares on
Conversion in the manner contemplated by
these Terms (including such amendment as
is necessary or expedient for the purposes of
complying with the provisions of Chapter 2L
of the Corporations Act where the Approved
Successor is not an ADI).
(c)Where an amendment under clause 12.4(b)
results in Approved Successor Shares being
issued to Holders, each Holder agrees to become
a member of the Approved Successor immediately
prior to the issue of the Approved Successor
Shares and appoints Westpac as its attorney
as contemplated under clause 13.10 to do all
126
(d)If an Approved Successor is a NOHC, Westpac
must not issue an Approved Replacement
Notice unless:
(ii) any capital injection carried out pursuant
to paragraph (i) is:
(A)unconditional;
(B)occurs simultaneously with the substitution
of the Approved Successor; and
(C)of equal or better quality capital and at least
the same amount as the Westpac Capital
Notes, unless otherwise approved by APRA
in writing.
(e)Nothing in this clause 12.4 prevents Westpac from
proposing, or limits, any scheme of arrangement
or other similar proposal that may be put to
Holders or other members of Westpac.
12.5 Meanings
In this clause amend includes modify, cancel, alter or
add to and amendment has a corresponding meaning.
13. General
13.1 Not deposit liabilities or
protected accounts
(a)Westpac Capital Notes are not deposit liabilities of
Westpac nor protected accounts for the purposes
of the Banking Act or Financial Claims Scheme
and are not subject to the depositor protection
provisions of the Banking Act.
(b)No member of the Westpac Group has any
liability for Westpac Capital Notes and neither
Westpac nor any member of the Westpac Group
guarantees Westpac Capital Notes.
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13.2 Further issues
Westpac reserves the right to issue further Westpac
Capital Notes or other securities which rank senior
to, equally with or behind existing Westpac Capital
Notes, whether in respect distributions, dividends,
return of capital on a Winding Up or otherwise.
approval, at any time buy or sell Westpac Capital
Notes in the open market, by tender to all or some
of the Holders, by private agreement or in any
other manner, at any price.
13.3 No set-off
(b)Subject to APRA’s prior written approval, Westpac
may purchase on-market or otherwise conduct
a buy-back in relation to Westpac Capital Notes
at any time and at any price.
Neither Westpac nor any Holder is entitled to set-off
any amounts due in respect of the Westpac Capital
Notes against any amount of any nature owed by
Westpac to the Holder or by the Holder to Westpac
(as applicable).
13.9 Waiver of immunity
13.4 Quotation
Westpac must use all reasonable endeavours
and furnish all such documents, information and
undertakings as may be reasonably necessary in
order to procure quotation of Westpac Capital Notes
on the financial market operated by ASX.
13.5 Meetings
The Deed Poll contains provisions for convening
meetings of the Holders. Any such meeting may
consider any matters affecting the interests of
Holders, including, without limitation, the amendment
of the Terms and the granting of approvals, consents
and waivers.
13.6 Notices
The Deed Poll contains provisions for the giving
of notices.
13.7 No other rights
Before Conversion, Westpac Capital Notes confer
no rights on a Holder:
(a)to vote at, or receive notices of, any meeting
of shareholders of Westpac;
(b)to subscribe for new securities or to participate
in any bonus issues of securities of Westpac; or
(c)to otherwise participate in the profits or property
of Westpac, except as set out in these Terms.
(c)Any Westpac Capital Note purchased or boughtback by Westpac pursuant to this clause is
immediately cancelled.
Westpac irrevocably and unconditionally waives
any objection it may now or in the future have to the
venue of any proceedings, and any claim it may now
or in the future have that any proceedings have been
brought in an inconvenient forum, if that venue falls
within clause 14.
13.10 Power of attorney
Each Holder irrevocably appoints each of Westpac,
its officers and any liquidator or administrator of
Westpac (each an Attorney) severally to be the
attorney of the Holder with power in the name and
on behalf of the Holder to sign all documents and
transfers and do any other thing as may in the
Attorney’s opinion be necessary or desirable to be
done in order for the Holder to observe or perform the
Holder’s obligations under these Terms.
The power of attorney given in this clause 13.10 is
given for valuable consideration and to secure the
performance by the Holder of the Holder’s obligations
under these Terms and is irrevocable.
14. Governing Law
These Terms are governed by the laws of New South
Wales, Australia. Each party irrevocably submits to
the non-exclusive jurisdiction of the courts of New
South Wales, and agrees that it will not object to the
venue or claim that the relevant action or proceedings
have been brought in an inconvenient forum.
13.8 Ability to trade, buy-back or purchase
(a)Westpac or any member of the Westpac Group
may, to the extent permitted by applicable laws
and regulations and with APRA’s prior written
APPENDIX B Westpac Capital Notes Terms
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Appendix B
Westpac Capital
Notes Terms
15. Interpretation and
definitions
back when used in these Terms have the meaning
given in the Corporations Act.
(k)Headings and boldings are for convenience only
and do not affect the interpretation of these Terms.
15.1 Interpretation
(l) The singular includes the plural and vice versa.
The following rules of interpretation apply in these
Terms unless the contrary intention appears or the
context otherwise requires.
(a)Definitions and interpretation under Westpac’s
constitution will also apply to these Terms unless
the contrary intention is expressed.
(b)Unless the context otherwise requires, if there is
any inconsistency between the provisions of these
Terms and Westpac’s constitution then, to the
maximum extent permitted by law, the provisions
of these Terms will prevail.
(c)Unless otherwise specified, the Westpac Directors
may exercise all powers of Westpac under these
Terms as are not, by the Corporations Act or by
Westpac’s constitution, required to be exercised
by Westpac in general meeting.
(d)Notices may be given by Westpac to a Holder in
the manner prescribed by Westpac’s constitution
for the giving of notices to members of Westpac
and the relevant provisions of Westpac’s
constitution apply with all necessary modification
to notices to Holders.
(e)Unless otherwise specified, a reference to a
clause is a reference to a clause of these Terms.
(f) If a calculation is required under these Terms,
unless the contrary intention is expressed, the
calculation will be rounded to four decimal places.
(g)If a payment is required to be made under
these Terms, unless the contrary intention is
expressed, the payment will be made in Australian
dollars only.
(n)If an event under these Terms must occur on
a stipulated day which is not a Business Day, then
the event will be done on the next Business Day.
(o)A reference to $, dollars or cents is a reference
to the lawful currency of Australia.
(p)A reference to time in these Terms is a reference
to Sydney, New South Wales, Australia time.
(q)Calculations, elections and determinations made
by Westpac under these Terms are binding on
Holders in the absence of manifest error.
(r) If any provision of these Terms is prohibited
or unenforceable in its terms but would not
be prohibited or unenforceable if it were read
down, and is capable of being read down, that
provision must be read down accordingly. If,
despite this clause, a provision is still prohibited
or unenforceable, if the provision would not be
prohibited or unenforceable if a word or words
were omitted, the relevant words must be severed
and, in any other case, the whole provision must
be severed. However, the remaining provisions
of the Terms are of full force and effect.
15.2 Definitions
In these Terms, except where the contrary intention
appears:
Acquisition Event means:
(h)Any provisions which refer to the requirements
of APRA or any other prudential regulatory
requirements will apply to Westpac only if
Westpac is an entity, or the holding company of
an entity, subject to regulation and supervision
by APRA at the relevant time.
(a)a takeover bid is made for Ordinary Shares and
the offer is, or becomes, unconditional and the
bidder has a relevant interest in more than 50%
of the Ordinary Shares on issue; or
(i) Any provisions in these Terms requiring the prior
written approval by APRA for a particular course
of action to be taken by Westpac do not imply that
APRA has given its consent or approval to the
particular action as of the Issue Date.
(j) The terms takeover bid, relevant interest, scheme
of arrangement, buy-back and on-market buy128
(m)A reference to a statute, ordinance, code or other
law includes regulations and other instruments
under it and consolidations, amendments,
re‑enactments or replacements of any of them.
(b)a court orders one or more meetings to be
convened to approve a scheme of arrangement
under part 5.1 of the Corporations Act which
scheme would result in a person having a
relevant interest in more than 50% of the Ordinary
Shares that will be on issue after the scheme is
implemented and either:
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(i) the relevant classes of members pass
a resolution approving the scheme; or
(ii) an independent expert issues a report that the
proposals in connection with the scheme are
in the best interests of the holders of Ordinary
Shares; or
(iii)Holders are treated as being a separate class
for the purposes of a scheme of arrangement
in respect of the replacement of Westpac
as the ultimate holding company of the
Westpac Group.
Notwithstanding the foregoing, the proposed
replacement of Westpac as the ultimate holding
company of the Westpac Group shall not constitute
an Acquisition Event if:
(c)the proposed successor holding company
complies with all applicable legal requirements
and obtains any necessary regulatory approvals
(including APRA’s prior written approval);
(d)the proposed successor holding company agrees
to take any necessary action to give effect to
an amendment to the Terms as contemplated
in clause 12.4;
(e)the ordinary shares of the proposed successor
holding company are to be listed on any
internationally recognised stock exchange;
(f) the proposed successor holding company has
a place of business in New South Wales or has
appointed a process agent in New South Wales to
receive service of process on its behalf in relation
to any legal proceedings arising out of or in
connection with Westpac Capital Notes;
(g)the proposed successor holding company has,
in the reasonable opinion of Westpac, the financial
capacity to satisfy Westpac’s obligations under
these Terms and the Deed Poll; and
(h)the proposed replacement of Westpac and the
events described in paragraphs (c) to (e) would
not, in the reasonable opinion of Westpac,
otherwise adversely affect the interests of Holders.
Acquisition Event Conversion Date has the
meaning set out in clause 5.7(a)(iii).
Additional Tier 1 Capital means Additional Tier 1
Capital as described by APRA.
ADI means an Authorised Deposit-taking Institution
under the Banking Act.
Administrative Action means any judicial
decision, official administrative pronouncement or
action, published or private ruling, interpretative
decision, regulatory procedure or policy, application
of a regulatory procedure or policy and any
notice or announcement (including any notice or
announcement of intent to adopt or make any of
those things).
Applicable Regulation means the ASX Listing
Rules, the ASX Settlement Operating Rules, the rules
and regulations of CHESS, the Corporations Act and
any rules or regulations made under or pursuant
to them.
Approved Replacement Notice has the meaning
given in clause 12.4(a).
Approved Successor means a holding company
that replaces, or is proposed to replace, Westpac as
the ultimate holding company of the Westpac Group
and that satisfies the requirements under paragraphs
(c) to (h) of the definition of ‘Acquisition Event’ in
these Terms.
Approved Successor Share means a fully paid
ordinary share in the capital of the Approved Successor.
APRA means the Australian Prudential Regulation
Authority (ABN 79 635 582 658) or any authority
succeeding to its powers or responsibilities.
ASX means ASX Limited (ABN 98 008 624 691)
or the securities market operated by it, as the
context requires.
ASX Listing Rules means the listing rules of ASX
from time to time with any modifications or waivers in
their application to Westpac, which ASX may grant.
ASX Settlement Operating Rules means the
settlement operating rules of ASX from time to time
with any applicable modification or waiver granted
by ASX.
Bank Bill Rate has the meaning given in clause 3.1.
Banking Act means the Banking Act 1959 (Cth).
Bookbuild means a process conducted by or on
behalf of Westpac whereby bids are lodged for the
Westpac Capital Notes, and, on the basis of those
bids, Westpac determines the Margin.
APPENDIX B Westpac Capital Notes Terms
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Appendix B
Westpac Capital
Notes Terms
Business Day means a business day as defined in
the ASX Listing Rules.
Buy Back means a transaction involving the
acquisition by Westpac of its Ordinary Shares
pursuant to the provisions of Part 2J of the
Corporations Act.
Distribution has the meaning given in clause 3.1.
Distribution Payment Date has the meaning given
in clause 3.5.
Capital Reduction means a reduction in capital by
Westpac of its Ordinary Shares in any way permitted
by the provisions of Part 2J of the Corporations Act.
Capital Securities means shares or any equity,
hybrid or subordinated debt capital security (whether
comprised of one or more instruments) issued by
Westpac excluding the Westpac Capital Notes.
Capital Security has the corresponding meaning.
Capital Trigger Event occurs when:
(a)Westpac determines; or
(b)APRA notifies Westpac in writing that it believes,
that either or both the Westpac Level 1 Common
Equity Tier 1 Capital Ratio or Westpac Level 2
Common Equity Tier 1 Capital Ratio is equal to or
less than 5.125%.
Distribution Period means the period from
(but excluding) the Issue Date until (and including)
the first Distribution Payment Date or thereafter from
(but excluding) each Distribution Payment Date until
(and including) the next Distribution Payment Date.
Distribution Rate has the meaning given in
clause 3.1.
Dividends means any interim, final or special
dividends payable in accordance with the
Corporations Act and Westpac’s Constitution
in relation to Ordinary Shares.
Equal Ranking Capital Security means:
Capital Trigger Event Conversion Date has the
meaning set out in clause 5.1(c)(iii).
CHESS means the Clearing House Electronic
Subregister System operated by ASX Settlement Pty
Limited (ABN 49 008 504 532).
Common Equity Tier 1 Capital has the meaning
prescribed by APRA in its prudential standards.
Conversion means, the conversion of all, some
or a proportion of each Westpac Capital Note into
Ordinary Shares under these Terms and Convert and
Converted have corresponding meanings.
Conversion Date means the applicable:
(a)Scheduled Conversion Date;
(b)Capital Trigger Event Conversion Date;
(c)Non-Viability Trigger Event Conversion Date; or
(d)Acquisition Event Conversion Date.
Conversion Number has the meaning given in
clause 8.1.
Corporations Act means the Corporations Act 2001
(Cth).
130
Deed Poll means the deed poll entitled “Westpac
Capital Notes Deed Poll” executed by Westpac and
dated 30 January 2013.
(a)in the case of a dividend, distribution or interest
in respect of the Capital Security, a Capital
Security (including TPS 2003 Preference Shares,
TPS 2003 Debentures, TPS 2004 Preference
Shares, TPS 2004 Debentures, TPS 2006
Preference Shares, TPS 2006 Notes, SPS 2008 I
Preference Shares, SPS 2008 I Notes, SPS 2008
II Preference Shares, SPS 2008 II Notes and
Westpac CPS 2012) which ranks or is expressed
to rank for payment of the dividend, distribution or
interest equally with Westpac Capital Notes; and
(b)in the case of redemption or repayment of,
reduction of capital on, cancellation of or
acquisition of the Capital Security, a Capital
Security (including TPS 2003 Preference Shares,
TPS 2003 Debentures, TPS 2004 Preference
Shares, TPS 2004 Debentures, TPS 2006
Preference Shares, TPS 2006 Notes, SPS 2008 I
Preference Shares, SPS 2008 I Notes, SPS 2008
II Preference Shares, SPS 2008 II Notes and
Westpac CPS 2012) which ranks or is expressed
to rank equally with Westpac Capital Notes for
repayment or a return of capital if Westpac is
wound up.
Face Value means as applicable either:
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(a)A$100 per Westpac Capital Note (Initial Face
Value); or
(b)the Initial Face Value reduced by the amount of
Face Value per Westpac Capital Notes which has
previously been Converted or written down in
accordance with clause 5.1 or clause 5.2.
FATCA means sections 1471 through 1474 of the
United States Internal Revenue Code of 1986, as
amended (or any consolidation, amendment, reenactment or replacement of those provisions and
including any regulations or official interpretations
issued, agreements entered into or non-US laws
enacted with respect to those provisions).
Financial Claims Scheme means the financial
claims scheme established under the Banking Act.
First Scheduled Conversion Condition has the
meaning set out in clause 4.2(a)(i).
Foreign Holder means a Holder whose address in
the Westpac Capital Notes Register is a place outside
Australia or who Westpac otherwise believes may not
be a resident of Australia and Westpac is not satisfied
that the laws of the Holder’s country of residence
permit the offer, holding or acquisition of Ordinary
Shares to the Holder (but Westpac will not be bound
to enquire into those laws), either unconditionally or
after compliance with conditions which Westpac, in
its absolute discretion, regards as acceptable and not
unduly onerous.
Franking Event occurs if Westpac determines
there is a material risk that as a result of any
change or proposed change in, or amendment or
proposed amendment to, the laws of Australia, or
their application or official or judicial interpretation
or administration, which change or amendment was
not expected by Westpac as at the Issue Date and
has or is expected to become effective on or after the
Issue Date, any Distribution would not be a frankable
distribution within the meaning of Division 202 of the
Tax Act.
Holder means, in respect of a Westpac Capital Note,
the person whose name is for the time being entered
in the Westpac Capital Notes Register as the owner
of it or, where it is held jointly by two or more persons,
the persons whose names appear in the Westpac
Capital Notes register as the joint owners of the
Westpac Capital Note.
Ineligible Holder means a Holder who is prohibited
or restricted by any applicable law or regulation in
force in Australia (including but not limited to Chapter
6 of the Corporations Act, the Foreign Acquisitions
and Takeovers Act 1975 (Cth), the Financial Sector
(Shareholdings) Act 1998 (Cth) and Part IV of the
Competition and Consumer Act 2010 (Cth)) from
being offered, holding or acquiring Ordinary Shares
(provided that if the relevant prohibition or restriction
only applies to the Holder in respect of some of its
Westpac Capital Notes, it shall only be treated as
an Ineligible Holder in respect of those Westpac
Capital Notes and not in respect of the balance of
its Westpac Capital Notes), and includes a Foreign
Holder. Westpac will be entitled to treat a Holder as
not being an Ineligible Holder unless the Holder has
otherwise notified it after the Issue Date and prior to
the Conversion Date.
Issue Date means the date on which Westpac
Capital Notes are issued, which is expected to be
on or about 8 March 2013.
Issue Date VWAP means the VWAP during the
period of 20 Business Days on which trading in
Ordinary Shares took place immediately preceding
but not including the Issue Date, as adjusted in
accordance with clauses 8.4 to 8.7.
Level 1 and Level 2 means those terms as defined
by APRA from time to time.
Liquidator means the liquidator or other official
responsible for the conduct and administration of
a Winding Up.
Liquidation Sum means an amount of surplus assets
equal to $100 per Westpac Capital Note (as adjusted
for any write-off or Conversion under clauses 5.1
or 5.2).
Margin has the meaning given in clause 3.1.
APPENDIX B Westpac Capital Notes Terms
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Appendix B
Westpac Capital
Notes Terms
Maximum Conversion Number has the meaning
given in clause 8.1.
these Terms and Redeem, Redeemable and
Redeemed have corresponding meanings.
NOHC means a ‘non-operating holding company’
within the meaning of the Banking Act.
Redemption Date means, in respect of each
Westpac Capital Note, the date specified by Westpac
as the Redemption Date in accordance with clause 6.
Nominated Party means one or more third parties
selected by Westpac in its absolute discretion (which
cannot include a member of the Westpac Group).
Non-Viability Trigger Event occurs when APRA
notifies Westpac in writing that it believes:
(a)Conversion of all or some Westpac Capital Notes,
or conversion or write down of capital instruments
of the Westpac Group, is necessary because,
without it, Westpac would become non-viable; or
Registry means Link Market Services Limited
(ABN 54 083 214 537) or any other person appointed
by Westpac to maintain the Westpac Capital
Notes Register.
Regulatory Event means either:
(a)as a result of:
(i) any amendment to, clarification of, or change
(including any announcement of a prospective
change) in, the laws or regulations of Australia;
or
(b)a public sector injection of capital, or equivalent
support, is necessary because, without it,
Westpac would become non-viable.
(ii) any Administrative Action or any amendment
to, clarification of, or change in an
Administrative Action,
Non-Viability Trigger Event Conversion Date has
the meaning set out in clause 5.2(c)(iii).
in each case by any legislative body, court,
government authority or regulatory body
(irrespective of the manner in which such
amendment, clarification, change or Administrative
Action is effective or Administrative Action is
announced) after the Issue Date provided it was
not expected by Westpac as at the Issue Date:
Optional Redemption/Transfer Date means
8 March 2019.
Ordinary Share means a fully paid ordinary share
in the capital of Westpac.
Prospectus means the prospectus relating to
the offer of Westpac Capital Notes dated on or
about 30 January 2013 and any supplementary
or replacement prospectus.
(iii)additional requirements would be imposed on
the Westpac Group in relation to the Westpac
Capital Notes; or
(iv)there would be a negative impact on the
Westpac Group,
Reclassification has the meaning given in clause 8.3.
Record Date means, in the case of:
(a)the payment of Distributions, the date which
is eight calendar days before the relevant
Distribution Payment Date or, if that date does not
fall on a Business Day, the immediately preceding
Business Day (or such other date as may be
prescribed under the ASX Listing Rules or, if
not prescribed by the ASX Listing Rules, a date
determined by Westpac and notified to ASX); and
(b)the payment of the Face Value of the Westpac
Capital Note upon a Redemption or Transfer,
a date determined by Westpac and notified to ASX
(or such other date as may be prescribed by ASX).
Redemption means the redemption of all or some
Westpac Capital Notes for their Face Value under
132
which Westpac determines, at its sole discretion,
to be unacceptable; or
(b)Westpac determines that all, some or a proportion
of all or some Westpac Capital Notes are not or
will not be treated as Additional Tier 1 Capital
of the Westpac Group under APRA’s prudential
standards (as amended from time to time), other
than as a result of a change of treatment expected
by Westpac as at the Issue Date.
Relevant Security means a security forming part of
the Tier 1 Capital of Westpac on a Level 1 basis or
Level 2 basis.
Replacement has the meaning given in clause 12.4(a).
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For personal use only
Sale Agent means the nominee (who cannot be
a member of the Westpac Group) appointed by
Westpac under the facility established for the sale of
Ordinary Shares issued by Westpac on Conversion
on behalf of Holders who do not wish to receive
Ordinary Shares on Conversion or who are Ineligible
Holders.
SPS 2008 I Preference Shares means the
preference shares of Westpac designated as 2008
Series 1 Preference Shares.
Scheduled Conversion Conditions means the
conditions in clause 4.2.
SPS 2008 II Preference Shares means the
preference shares of Westpac designated as 2008
Series II Preference Shares.
Scheduled Conversion Date has the meaning given
in clause 4.1.
Second Scheduled Conversion Condition has the
meaning set out in clause 4.2(a)(ii).
Senior Creditors means all creditors of Westpac
(present and future), including depositors of
Westpac and all holders of Westpac’s senior or
subordinated debt:
(a)whose claims are admitted in the Winding Up; and
(b)whose claims are not made as holders of
indebtedness arising under:
SPS 2008 II Notes means the notes issued
by Westpac under the note deed poll dated
20 February 2009.
Subsidiary has the meaning given in the
Corporations Act.
Tax Act means:
(a)the Income Tax Assessment Act 1936 (Cth) or the
Income Tax Assessment Act 1997 (Cth) (both as
amended from time to time, as the case may be,
and a reference to any section of the Income Tax
Assessment Act 1936 (Cth) includes a reference
to that section as rewritten in the Income Tax
Assessment 1997 (Cth); and
(i) an Equal Ranking Capital Security; or
(b)any other law setting the rate of income tax
payable; and
(ii) an Ordinary Share.
(c)any regulation made under such laws.
Solvent Reconstruction means a scheme of
amalgamation or reconstruction, not involving
a bankruptcy or insolvency, where the obligations
of Westpac in relation to the outstanding Westpac
Capital Notes are assumed by the successor entity
to which all, or substantially all of the property, assets
and undertaking of Westpac are transferred or where
an arrangement with similar effect not involving
a bankruptcy or insolvency is implemented.
Special Resolution means:
(a)a resolution passed at a meeting of Holders by
a majority of least 75% of the votes validly cast by
Holders in person or by proxy and entitled to vote
on the resolution; or
(b)the written approval of Holders holding at least
75% of the Westpac Capital Notes.
SPS 2008 I Notes means the notes issued
by Westpac under the note deed poll dated
18 June 2008.
Tax Event occurs when Westpac determines that
there is a material risk that the Westpac Group would
be exposed to a more than de minimis adverse tax
consequence or increased cost in relation to Westpac
Capital Notes other than a tax consequence or cost
that Westpac expected as at the Issue Date.
Terms means these terms and conditions of Westpac
Capital Notes.
Tier 1 Capital means at any time any equity, debt
or hybrid so described by APRA.
TPS 2003 Debentures means the securities issued
under Westpac’s Junior Subordinated Indenture
dated 13 August 2003 as supplemented by the
Supplemental Indenture No 1 dated 13 August 2003.
TPS 2003 Preference Shares means the preference
shares of Westpac designated as 2003 Series 1
Preference Shares.
TPS 2004 Debentures means the securities issued
under Westpac’s Junior Subordinated Indenture
APPENDIX B Westpac Capital Notes Terms
133
For personal use only
Appendix B
Westpac Capital
Notes Terms
dated 13 August 2003 as supplemented by the
Supplemental Indenture No 2 dated 5 April 2004.
Westpac Capital Note means the Westpac Capital
Note issued by Westpac under the Terms.
TPS 2004 Preference Shares means the preference
shares of Westpac designated as 2004 Series 1
Preference Shares.
Westpac Capital Notes Register means the register
of Holders maintained by Westpac or its agent and
includes any subregister established and maintained
under CHESS.
TPS 2006 Notes means the notes issued by Westpac
under the Note Deed between Westpac and Westpac
Funds Management Limited dated 10 May 2006.
TPS 2006 Preference Shares means the preference
shares of Westpac designated as 2006 Series 1
Preference Shares.
Transfer means the transfer of Westpac Capital
Notes by Holders to a Nominated Party in accordance
with clause 7 and Transferred has a corresponding
meaning.
Transfer Notice means a notice issued in
accordance with clause 7.
VWAP means, subject to any adjustments under
clauses 8.2 and 8.3, the average of the daily volume
weighted average sale prices (rounded to the nearest
full cent) of Ordinary Shares sold on ASX during the
relevant period or on the relevant days but does not
include any “crossing” transacted outside the “Open
Session State” or any “special crossing” transacted
at any time, each as defined in the ASX Market Rules
or any overseas trades or trades pursuant to the
exercise of options over Ordinary Shares.
VWAP Period means:
(a)in the case of a Conversion resulting from a Capital
Trigger Event or a Non-Viability Trigger Event,
the period of 5 Business Days on which trading in
Ordinary Shares took place immediately preceding
(but not including) the Conversion Date; and
(b)in the case of any other Conversion, the period
of 20 Business Days on which trading in Ordinary
Shares took place immediately preceding (but not
including) the Conversion Date; or
(c)otherwise, the period for which the VWAP is to be
calculated in accordance with these Terms.
Westpac CPS 2012 means the convertible
preference shares of Westpac designated as
Westpac CPS.
Westpac Directors means some or all of the
directors of Westpac acting as a board.
Westpac Group means Westpac and its
controlled entities.
Westpac Level 1 Common Equity Tier 1 Capital
Ratio means, in respect of the Westpac Level 1
Group, the ratio of the Common Equity Tier 1 Capital
of the Westpac Level 1 Group to the risk weighted
assets of the Westpac Level 1 Group, calculated
in accordance with APRA’s prudential standards
(as amended from time to time).
Westpac Level 1 Group means either:
(a)Westpac; or
(b)the “extended licensed entity” which is comprised
of Westpac and each Subsidiary of Westpac as
specified in any approval granted by APRA in
accordance with APRA’s prudential standards
(as amended from time to time).
Westpac Level 2 Common Equity Tier 1 Capital
Ratio means, in respect of the Westpac Level 2
Group, the ratio of the Common Equity Tier 1 Capital
of the Westpac Level 2 Group to the risk weighted
assets of the Westpac Level 2 Group, calculated
in accordance with APRA’s prudential standards
(as amended from time to time).
Westpac Level 2 Group means Westpac and each
Subsidiary that is recognised by APRA as part of
Westpac’s Level 2 group in accordance with APRA’s
prudential standards (as amended from time to time).
Westpac means Westpac Banking Corporation
(ABN 33 007 457 141).
134
Prospectus
For personal use only
Winding Up means:
(a)a court order is made for the winding up of
Westpac; or
(b)an effective resolution is passed by shareholders
or members for the winding up of Westpac, other
than in connection with a Solvent Reconstruction.
A Winding Up must be commenced by a court
order or an effective resolution of shareholders or
members. Neither (i) the making of an application, the
filing of a petition, or the taking of any other steps for
the winding up of Westpac (or any other procedure
whereby Westpac may be dissolved, liquidated,
sequestered or cease to exist as a body corporate),
nor (ii) the appointment of a receiver, administrator,
administrative receiver, compulsory manager, ADI
statutory manager or other similar officer (other
than a Liquidator) in respect of Westpac, constitutes
a Winding Up for the purposes of these Terms.
15.3 Inconsistency with ASX Listing Rules
So long as Westpac Capital Notes are quoted on
ASX, these Terms as they relate to those Westpac
Capital Notes are to be interpreted in a manner
consistent with the applicable ASX Listing Rules,
provided always that where a clause of the Terms is
required to give effect to the prudential requirements
of APRA applicable to Westpac from time to time,
the interpretation which gives effect to that APRA
requirement shall prevail.
APPENDIX B Westpac Capital Notes Terms
135
For personal use only
This page has been left blank intentionally.
Broker Code
Broker stamp
Westpac Banking corporation (“Westpac”)
ABN 33 007 457 141
Adviser Code
Broker firm offer closing Date
10.00am (sydney time):
7 march 2013*
For personal use only
Westpac capital Notes offer – Broker firm applicatioN form
a
This Broker Firm Application Form relates to the Broker Firm Offer by Westpac of Westpac Capital Notes made under the Prospectus dated
7 February 2013.
Broker firm applicants mUst contact their syndicate Broker for information on how to submit this Broker firm application form
and their application payment.
The Prospectus contains important information about investing in Westpac Capital Notes and you should read the Prospectus in full before
applying for Westpac Capital Notes. This Broker Firm Application Form should be read in conjunction with the Prospectus. Capitalised words
used in this Broker Firm Application Form have the meanings given to them in the Prospectus. This Broker Firm Application Form is important.
if you are in any doubt as to how to deal with it, please contact your syndicate Broker or other professional adviser without delay.
This Broker Firm Application Form must not be distributed unless included in, or accompanied by, the Prospectus.
* Westpac and the Joint Lead Managers may, in their absolute discretion, close the Offer early or extend the Offer Period without notice.
Westpac may also withdraw the Offer at any time before Westpac Capital Notes are issued.
Number of Westpac Capital Notes
applied for
,
,
Issue Price per Westpac
Capital Note
at
a$100
Application Payment
B
a$
,
,
. 0 0
(minimum 50 Westpac Capital Notes (A$5,000), thereafter in multiples of 10 Westpac Capital Notes (A$1,000))
please complete YoUr Details BeloW (refer overleaf for correct forms of registrable names)
Applicant #1
Surname / Company name
c
Title
First name
Middle name
Joint applicant #2
Surname / Company name
Title
First name
Middle name
Designated account e.g. <Super Fund> (or joint applicant #3)
please complete aDDress Details
PO Box/RMB/Locked bag/Care of (c/-)/Property name/Building name (if applicable)
D
Unit number / Level
Street number
Street name
Suburb / City or Town
State
Postcode
Country
Email address (only for the purpose of electronic communication of Westpac Capital Notes holder information)
CHESS HIN (if you want to add this holding to a specific CHESS holding, write the number here)
e X
Please note: if you supply a CHESS HIN but the name and address details on this Broker Firm Application Form do not correspond exactly with
your CHESS registration details you will not be able to include any Westpac Capital Notes Allocated to you on your existing CHESS HIN.
Instead, you will be issued with an issuer-sponsored holding for any Westpac Capital Notes Allotted to you.
Telephone number where you can be contacted during business hours
f
(
Contact Name (PRINT)
)
loDgemeNt iNstrUctioNs
the closing Date for the Broker firm offer is expected to be 10.00am (sydney time) on 7 march 2013. You must return your Broker Firm
Application Form and Application Payment directly to the Syndicate Broker who offered you an Allocation under the Broker Firm Offer, in
accordance with their instructions, and Not to the Registry or Westpac.
this Broker firm application form cannot be completed electronically.
Completed Broker Firm Application Forms and Application Payments must be received by your Syndicate Broker in sufficient time for your
Syndicate Broker to process that Application by the Closing Date for the Broker Firm Offer. If you have any questions concerning your
Application, please contact your Syndicate Broker directly.
WBc Bro002
gUiDe to the Broker firm applicatioN form
For personal use only
a Number of Westpac Capital Notes applied for: Enter the number of Westpac
Capital Notes you wish to apply for. The Application must be for a minimum of
50 Westpac Capital Notes (A$5,000) and thereafter in multiples of 10 Westpac Capital
Notes (A$1,000). Westpac may Allot you all of the Westpac Capital Notes applied for,
a lesser number, or none at all.
b application Payment: Enter the amount of your Application Payment. To calculate the
amount, multiply the number of Westpac Capital Notes applied for by the Issue Price
(A$100). Amounts should be in Australian dollars. Please ensure you enclose your
Application Payment equalling this amount with your Application.
Broker Firm Applicants must contact the Syndicate Broker who offered them an
Allocation under the Broker Firm Offer for instructions on how to submit their Broker
Firm Application Form and Application Payment. Do not send your completed Broker
Firm Application Form and Application Payment to the Registry or Westpac.
C registrable Name(s): Enter the full name you wish to appear on your Holding
Statement. This must be either your own name or the name of a company. Up to three
joint Applicants may register. You should refer to the table below for the correct forms
of registrable names. Applications using the wrong form of names may be rejected.
CHess participants should complete their name identically to that presently
registered in CHESS.
D address: Enter your postal address for all correspondence. All communications to you
from Westpac and the Registry will be mailed to the person(s) and address as shown.
For joint Applicants, only one address can be entered.
e CHess Participant: Westpac will apply to ASX for Westpac Capital Notes to
participate in CHESS, operated by ASX Settlement Pty Ltd. Westpac will operate an
electronic CHESS sub-register and an electronic issuer-sponsored sub-register.
Together, the two sub-registers will make up Westpac’s principal register of Westpac
Capital Notes. Westpac will not be issuing paper certificates to Applicants in respect
of Westpac Capital Notes unless required by law. If you are a CHESS participant (or
are sponsored by a CHESS participant) and you wish to hold Westpac Capital Notes
Allocated to you under this Application on the CHESS sub-register, enter your
CHESS Holder Identification Number (HIN).
Westpac Capital Notes will only be issued under an existing CHess HiN if your
full name and address details on this broker Firm application Form are
identical to your CHess registration details. If your CHESS registration details
are not identical, you will not be able to include any Westpac Capital Notes Allocated
to you on your existing CHESS HIN. Instead, you will be issued with an issuersponsored holding for any Westpac Capital Notes Allocated to you. Once Westpac
Capital Notes have been Allotted, you may be able to combine your Westpac Capital
Notes holding with your existing CHESS sponsored holdings by contacting your
broker.
F Contact Details: Enter your telephone number, area code and contact name in case
we need to contact you in relation to your Application.
aCCePtaNCe oF tHe oFFer
By returning this Broker Firm Application Form and Application Payment to my/our Syndicate Broker in accordance with their instructions, I/we:
recommendation that Westpac Capital Notes are suitable for me/us, given my/our
• acknowledge having personally received a printed or electronic copy of the full
investment objectives, financial situation or particular needs;
Prospectus (and any supplementary or replacement document) accompanying this
• acknowledge that Distributions are discretionary and only payable subject to
Broker Firm Application Form and have read them all in full;
satisfaction of the Distribution Payment Conditions;
• agree to be registered as a holder of Westpac Capital Notes and to be bound by the
terms of the Offer, the Prospectus, the Westpac Capital Notes Terms and the Notes • declare that I am/we are an Australian resident;
• represent and warrant that I am/we are not acting for the account or benefit of any
Deed Poll;
person to whom it would not be lawful to make the Offer under applicable securities law;
• agree to become a member of Westpac and to be bound by the terms of Westpac’s
• represent and warrant that I am/we are not in the United States or New Zealand and
Constitution, if issued Ordinary Shares on Conversion;
I am/we are not a US Person (and not acting for the account or benefit of a US
• declare that all details and statements in this Broker Firm Application Form are
Person), and I/we will not offer, sell, deliver or transfer Westpac Capital Notes in the
complete and accurate;
United States or New Zealand or to, or for the account or benefit of, any US Person
• declare that each Applicant, if a natural person, is over 18 years of age;
or any member of the public in New Zealand;
• acknowledge and declare that I/we authorise Westpac (and the Registry on
Westpac’s behalf) to use and disclose my/our personal information in the manner set • acknowledge that Westpac Capital Notes are not deposit liabilities or protected
accounts of Westpac for the purposes of the Banking Act 1959 (Cth) or Financial
out in Section 8.10 of the Prospectus;
Claims Scheme, are not subject to the depositor protection provisions of Australian
• acknowledge that once I/we submit this Broker Firm Application Form I/we may not
banking legislation, and are not guaranteed or insured by any Australian government,
modify or withdraw it except as permitted by law;
government agency, compensation scheme of Australia or any other jurisdiction, or
• apply for the number of Westpac Capital Notes at the Australian dollar amount shown
any other person;
on the front of this Broker Firm Application Form;
• agree to being Allocated the number of Westpac Capital Notes that I/we apply for, or • acknowledge that an investment in Westpac Capital Notes is subject to investment risk,
including possible delays in payment and loss of income and principal invested, and
a lower number Allocated in a way described in the Prospectus, or no Westpac
that neither Westpac nor any member of the Westpac Group guarantees the capital
Capital Notes at all;
value or performance of Westpac Capital Notes or any particular rate of return;
• authorise Westpac and the Joint Lead Managers and their respective officers or
agents, to do anything on my/our behalf necessary for Westpac Capital Notes to be • acknowledge that investments in the Westpac Capital Notes are an investment in
Westpac and may be affected by the ongoing performance, financial position and
Allocated to me/us, including to act on instructions received by the Registry upon
solvency of Westpac; and
using the contact details in Sections C, D or F;
• acknowledge that the information contained in the Prospectus (and any supplementary • acknowledge that Westpac may reject an Application without giving any reason,
including where this Broker Firm Application Form is not properly completed.
or replacement document) is not financial product or investment advice or a
PrivaCy statemeNt
Link Market Services Limited (the Registry) advises that once you become a holder of Westpac Capital Notes, Chapter 2C of the Corporations Act 2001 (Cth) requires information about you
as a securityholder (including your name, address and details of the Westpac Capital Notes you hold) to be included in the register of the entity which has issued securities to you. Information
is collected to administer your securityholding and if some or all of the information is not collected then it might not be possible to administer your securityholding. Your personal information
may be disclosed to Westpac and others as set out in Section 8.10 of the Prospectus. You can obtain access to your personal information by contacting the Registry on 1300 554 474. The
Registry’s privacy policy is available on the Registry’s website (www.linkmarketservices.com.au). The privacy policy of Westpac is available on Westpac’s website (www.westpac.com.au).
CorreCt Forms oF registrable Name(s)
Note that ONLY legal entities are allowed to hold Westpac Capital Notes. Applications must be in the name(s) of natural persons or companies. At least one full given name and the
surname is required for each natural person. The name of the beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly
as described in the examples of correct forms of registrable name(s) below.
type of investor
individual
Use given name(s) in full, not initials
Company
Use Company’s full title, not abbreviations
Joint holdings
Use full and complete names
trusts
Use the trustee(s) personal name(s) or company name (in the case of a corporate trustee)
Deceased estates
Use the executor(s) personal name(s)
Correct form of registration
incorrect form of registration
Mrs Katherine Clare Edwards
K C Edwards
Liz Biz Pty Ltd
Mr Peter Paul Tranche &
Ms Mary Orlando Tranche
Mrs Alessandra Herbert Smith
<Alessandra Smith A/C>, or
ABC Pty Ltd <Alessandra Smith A/C>
Ms Sophia Garnet Post &
Mr Alexander Traverse Post
<Est Harold Post A/C>
Liz Biz P/L or Liz Biz Co.
Peter Paul &
Mary Tranche
Alessandra Smith
Family Trust
Estate of late Harold Post
or
Harold Post Deceased
minor (a person under the age of 18 years)
Use the name of a responsible adult with an appropriate designation
Mrs Sally Hamilton
<Henry Hamilton>
Master Henry Hamilton
Partnerships
Use the partners’ personal names
Mr Frederick Samuel Smith &
Mr Samuel Lawrence Smith
<Fred Smith & Son A/C>
Fred Smith & Son
long names
Mr Hugh Adrian John Smith-Jones
Mr Hugh A J Smith Jones
Clubs / Unincorporated bodies / business names
Use office bearer(s) personal name(s)
superannuation funds
Use the name of the trustee of the fund
Mr Alistair Edward Lilley
<Vintage Wine Club A/C>
XYZ Pty Ltd
<Super Fund A/C>
Vintage Wine Club
XYZ Pty Ltd
Superannuation Fund
Put the name(s) of any joint Applicants and/or account description using < > as indicated above in designated spaces at section C on the Broker Firm Application Form.
For personal use only
CORPORATE
DIRECTORY
Registered Office
of Westpac
Westpac Banking Corporation
Westpac Group Secretariat
Level 20, Westpac Place
275 Kent Street
Sydney NSW 2000
Legal and taxation
adviser to the Offer
Allens
Level 28
Deutsche Bank Place
Corner Hunter & Phillip Streets
Sydney NSW 2000
Auditor
PricewaterhouseCoopers
Darling Park Tower 2
201 Sussex Street
Sydney NSW 2000
Registry
Link Market Services Limited
Level 12
680 George Street
Sydney NSW 2000
Structuring Adviser
and Joint Lead Manager
Joint Lead Managers
Westpac Institutional Bank
Level 2, Westpac Place
275 Kent Street
Sydney NSW 2000
ANZ Securities Limited
ANZ Centre Melbourne
Level 9, 833 Collins Street
Docklands VIC 3008
Commonwealth Bank of Australia
Ground Floor, Tower 1
201 Sussex Street
Sydney NSW 2000
Macquarie Capital (Australia) Limited
Level 9
1 Martin Place
Sydney NSW 2000
Morgan Stanley Australia Securities Limited
Level 39, Chifley Tower
2 Chifley Square
Sydney NSW 2000
UBS AG, Australia Branch
Level 16
Chifley Tower
2 Chifley Square
Sydney NSW 2000
Deutsche Bank AG, Sydney Branch
Level 16
Deutsche Bank Place
Corner Hunter & Phillip Streets
Sydney NSW 2000
HOW TO CONTACT US
Westpac Capital Notes Information Line
1300 133 814 (local call cost within Australia)
(Monday to Friday – 8.30am to 5.30pm, Sydney time)
Website: www.westpac.com.au/investorcentre
For personal use only